Back around March or April the forecast annual growth rate for Australia through 2016 was put 3.7 percent by the experts. This was not the 4.5 percent plus we are used to, but not too bad compared to the rest of the world.
Since then the forecast growth rate for 2016 has been dropped three times and is currently sitting at 2.75 percent.
If 2016 does show a growth rate of 2.75 percent, it will be lowest growth rate since the 60s.
However, based on the economic news over the last couple of months, I would not be the least bit surprised if the growth rate for 2016 ends up much closer to 2 percent.
Such growth rates are unheard of for Australia for anyone under about 50 years of age.
According to the International Monetary Fund (IMF) the four main issues Australia faces are:
- The depth and speed of the falloff in revenue from resources.
- Per-capita national wages growth, which is forecast to stagnate and even possibly fall.
- Size of the labour force, which is forecast to remain flat over 2016.
- Australia’s current issue with falling productivity is forecast to get worse in 2016.
That last point is kind of interesting. What it is saying is that the average worker is doing less work for the money than they used to. It seems that the amount of work output by the average worker has fallen by almost a fifth over the last 10 years. Apparently this fall off in productivity is mainly due to the combined result of technology changes and a lack of skills (i.e., workers are not trained sufficiently for the work they are doing).
I have said it before, and I will say it again, 2016 is going to be an interesting year.