Australia's 25-year run without a recession ties record
Resource industries battered by weather, but service sector picks up slack
KAORI TAKAHASHI, Nikkei staff writer
SYDNEY -- The Australian economy grew a seasonally adjusted 0.3% in the January-March period, the Australian Bureau of Statistics announced Wednesday, marking 103 quarters, or 25 years and nine months, without a recession.
A recession is traditionally defined as two consecutive quarters of falling gross domestic product. Australia's streak ties the record held by the Netherlands, which went on a comparable run starting in the early 1980s.
The economy's quarter-on-quarter growth in the first three months of the year exceeded market expectations of 0.2%, but slowed from 1.1% in the October-December quarter. GDP rose 1.7% on the year.
Australia's economy has been propped up by service industries, while products such as natural resources have suffered. Severe weather events such as Cyclone Debbie, which hurt coal exports, have stifled growth. Although exports have generally buttressed the economy, they have begun to struggle. Exports of iron ore and other goods fell 2.6% during the quarter, as prices continue to slump. Including services, total exports declined 1.6%.
But Australia's service and investment sectors have offset those drawbacks. Chinese investors have been pouring money into property in the country's major cities, and construction demand is swelling. The amount of direct investment approved by the Foreign Investment Review Board was 30% higher in the 12 months beginning July 2015 than in the previous year.
However, Australia's economic expansion has not led to increased hiring. Unemployment remained high at 5.7% in April as companies remain cautious about hiring, with earnings deteriorating in industries such as natural resources. Moreover, personal consumption advanced just 0.5% in the January-March quarter. Although breaking the world record for longest period without a recession is now in sight, Australia will need to come up with a growth strategy if it is to maintain its expansion.