Powered by MOMENTUM MEDIA
subscribe to our newsletter

Poor productivity continues to inhibit GDP growth

A foremost challenge faced by the Australian economy going forward is to reinvigorate productivity growth, says HSBC Global Research.

In an economic update titled Australia in 2016, HSBC Global Research argued that weak productivity growth is restricting the Australian economy and having a significant impact on its long-term GDP numbers.

Research by HSBC indicated that Australia’s potential growth rate has fallen from 3.25 per cent to 2.5-2.75 per cent in the decade leading up to the financial crisis.

“If this lower rate of trend growth is sustained then by 2030 the economy would be 7.5 per cent smaller than it could otherwise have been,” the update stated.

“This is a loss of 7.5 per cent of GDP, or equivalent to two years of no growth (a two-year recession).”

Advertisement
Advertisement

HSBC also said that fiscal repair remains a medium-term challenge for the economy.

“Over the medium term, the budget will need to return to balance, most likely through a combination of spending restraint and higher revenues,” the update said.

Fiscal tightening, during a period of below-trend growth, risks weakening the economy and could therefore be “self-defeating”, HSBC said.

“Finding the right balance of spending cuts and revenue measures that put the budget on a credible path back to surplus will be tricky.”
While the economy faces broad-based challenges as stated above, HSBC concluded that Australia's economic rebalancing nonetheless remains on track.

“The services sectors, including tourism, education, and healthcare, are set to continue to be supported by local and Asian demand, driving further solid jobs and GDP growth,” the update said.

PROMOTED CONTENT


[Related: NAB predicts three Fed rate hikes for 2016]

 

Poor productivity continues to inhibit GDP growth
mortgagebusiness

Latest News

The Queensland government and lenders have begun offering financial assistance to those affected by Cyclone Niran in Queensland. ...

The CEO of Aussie Home Loans, James Symond, has forecast that broker market share will hit 70 per cent in the next five years, as more consu...

The technology company has launched a new fund designed to invest in technology scale-ups that are aiming for exponential growth. ...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: How the broking industry has evolved - and what's next for Aussie

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.