Name: Why Australia Hasn't Had A Recession In Decades
Uploaded: 2019-02-18T09:06:41.000Z
Duration: 4 min 55 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

America's economy is approaching a big milestone.

If it keeps humming until July 2019, it will be the longest expansion in U.S. history.

Adverbs of manner

It would be exactly one decade and one month old by then.

But there's another country with an even more impressive run.

Australia hasn't had a recession in 27 years.

Be smart. Be organized. Be lucky. So if I've got any advice

for other countries, it's try and be as lucky as Australia.

That luck has to do with Australia's treasure trove of natural resources : iron ore, gas and coal.

You know Australia is on the other side of the world

and sitting on tremendously valuable minerals right at the point where the Chinese economy is just around the corner and exploding.

Australia and all its natural resources were in the right geographic neighborhood just as the Chinese economy started to take off.

And it just so happens that China did a big fiscal stimulus in 2008

and spent a great deal of money building new cities.

So all of those resources were drawn from places like Australia.

So that also served as a huge tailwind at a time when developed markets were in a whole lot of trouble.

The year 2008 was a time of economic turmoil.

The Global Financial Crisis hit and markets crumbled around the world.

But as it turns out this was also a year for Australia's economic management  to really show off.

At the time the government had a very helpful and very low level of debt.

Australia set up a compulsory retirement system called the superannuation system.

It requires employers put money into its employees' retirement savings.

Australia's superannuation assets top $2.8 trillion dollars as September 2018.

Since companies and citizens have to build up retirement savings,

some of the financial burden to pay off pensions was taken off of Australia's government.

As other economies reeled in the wake of the 2008 crisis, the  Australian Government was then able to put money directly into people's bank accounts.

This boosted consumer spending in order to stimulate growth.

In 2008, the Australian  Government unlike some

other developed market governments actually jumped in very quickly with fiscal stimulus,

so that helped to kind of minimize the effect of the crisis.

The country's numbers continued to look sluggish after the financial crisis.

or for long enough to meet the definition of a recession.

It takes two quarters of negative growth to fall into a recession.

Australia's economy did post a few negative quarters since 2008, but no country's perfect.

Overall Australia's economy has been managed pretty well in recent years partly because of a strong and stable central bank.

Australia has an independent central bank and it's

It also has a floating exchange rate and the exchange rate helped it adjust to international shocks.

Australia's economic reforms gave it flexibility in times of hardship.

For example, floating the Australian dollar.

In 1983, Australia's government moved the dollar onto a floating exchange rate.

This meant that the dollar would be valued by supply and demand

instead of being subject to influence from its government or its central bank.

It allows the economy to react to shocks as well

Typically when an economy is hit by some sort of

negative shock, the currency will adjust.

It will depreciate and that helps promote exports.

Another reason behind Australia's economic track record lies in its immigration policy.

Since the late 1990s, Australia has seen growth in

temporary migration, many arriving to the country on student or temporary work visas.

The number of temporary migrants peaked in the year 2000.

However a recent change to immigration law in 2018

through if they wanted to come to the country.

average incomes aren't rising by much because the

number of people continues to rise that means the total

GDP continues to rise at even more rapid pace.

Immigration is one of the key reasons that Australians are used to talking about economic growth rates of 3 percent or 4 percent.

Part of that's underpinned by much faster population growth

Most experts think Australia's economy remains strong in 2019, but it's not without risks.

Australia's suffering at the moment from pretty weak wage growth.

There's a lot of fear right now that China is hitting a wall.

That will hit demand for Australian products.

The good news is to the extent that the Chinese are buying commodities

hopefully will find buyers from overseas for many of those commodities

The bad news is the rest of the world economy is not doing that well.

For Australia to do really well, the rest of the world  has to do well.