Australia’s economy grows by 2.1%, but people’s living standards aren’t keeping pace
The growth figures for June beat expectations – helped in part by record EV sales. But on a per-person basis, the economy is not doing so well.
Australia's economy grew by 2.1% in the year to June, driven by record sales of imported electric vehicles, according to the Australian Bureau of Statistics. However, this growth has not led to improvements in living standards for Australians, as the average person's income per capita remains stagnant. Only eight of the past 20 quarters have seen the economy expand at a slower rate than the population, meaning net immigration is currently propping up the economy.
This situation may be described as a "per capita recession," where living standards are not improving despite GDP growth. Car sales, especially electric and hybrid models, have surged due to high petrol prices, but consumer spending remains patchy and has been negatively impacted by concerns about the conflict in the Middle East.
Business investment is flat in the June quarter, with data centre-related investment experiencing a sharp decline, despite a 77% increase in investment in this sector over the past year. However, the employment benefits of these data centres are limited, as most profits are returned to foreign shareholders. The Reserve Bank of Australia has indicated that a 2% growth rate is its "speed limit," and any growth significantly above that could fuel inflation.
The latest forecasts for economic growth across 2025-26 are at 1.9%, which is not expected to influence the bank's decision on interest rate hikes.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
