Doug Porter, the chief economist at Bank of Montreal, is jealous of Australia.
Despite having a commodity-based economy similar to Canada’s and being even more exposed to the downturn in China than Canada, somehow Australia has escaped recession while Canada hasn’t. Australia’s latest GDP numbers show the country’s economy grew 0.7 per cent in the second quarter of the year.
“That compares with the two down quarters in Canada to start the year,” Porter wrote in a client note. “Heck, Australia has had only two down quarters in the past 14 years combined!”
Not only that, but Australia hasn’t seen a recession (two consecutive negative quarters) since 1991 — 24 years of continuous economic growth. Porter dubs Oz an “extraordinarily lucky" country.
"Canada did manage to grind out positive GDP growth for 17 consecutive years at one point (1992-2008, inclusive), but that stretch
was bookended by two wicked recessions," he notes.
But Australians may not be feeling so lucky themselves. The Chinese economic downturn and its negative impact on commodity prices has many down under spooked. They're looking at Canada’s recession, as well as the recession in Brazil, which also has a commodities-heavy economy, and asking: Is Australia next?
Australia and Canada "now have a number of common problems,” Andrew Charlton, a former economic adviser to Australia’s government, tells Australia’s ABC news.
"Australia used to have resources and energy being about a third of our exports and that rose over the last 10 years to more than half of our exports, and we saw broadly the same thing in Canada.
"We have declining terms of trade, we have declining national income, per capita at least — and we have this legacy of very high house prices which is going to be continue to be fuelled by very low monetary policy."
Yup, sounds like Canada. Just without the recession.
Also on HuffPost