CANBERRA, Australia — For decades, Australia has been hailed as a "miracle economy," with a streak of uninterrupted growth that has earned it the nickname "the lucky country." However, beneath the surface, warning signs are emerging that the country's prosperity may be waning.
Despite avoiding recession since the early 1990s, Australia's economy is facing significant challenges, including a housing crisis, stagnant wages, and declining productivity. The country's reliance on natural resources, particularly mining, has driven growth in recent years, with exports of coal, iron ore, and gold generating billions of dollars in revenue. However, this growth has not translated to increased prosperity for many Australians, with household debt soaring to over 200% of household income and rental affordability at its lowest level since 2008.
The median house price in Sydney is the second-highest in the world, after Hong Kong, and the cost of living is increasing, with food prices, including those for staples like meat and vegetables, rising significantly since 2020. Meanwhile, wages have not kept pace with inflation, leaving many Australians feeling like they are falling behind. Per capita GDP has fallen for 21 consecutive months, and real wages have been negative for over two years.
As the country grapples with these challenges, policymakers are facing pressure to implement economic reforms to boost productivity and competitiveness. The government has taken steps to encourage innovation and investment in key industries, including manufacturing and mining, but analysts say more needs to be done to address the housing crisis and identify opportunities for growth. With the global economy facing uncertainty and trade tensions on the rise, Australia's ability to adapt and reform its economy will be crucial in maintaining its position as one of the world's highest-performing economies.
