Greece’s economy has stabilised and is on the road to recovery. But just as things are getting better for Greece, the Australian economy has been exposed in a damning report by the International Monetary Fund (IMF) that predicts that growth this year will lag behind that of Greece.
The IMF had initially predicted an increase of 2.1 per cent in April, however the forecast was downgraded to 1.7 per cent on Tuesday. By comparison, the predictions for Greece grew by two per cent this year; despite the fact that the country’s economy almost collapsed during its turbulent decade-long debt crisis.
The grim results show that Australia’s economy is at the slowest pace since the global financial crisis a decade ago. During Australia’s last recession in 1991 and 2018, the pace of growth was 3.2 per cent, higher than the current 1.4 per cent for the year to 30 June.
IMF analysts hinted that “subdued growth is a consequence of rising trade barriers; elevated uncertainty surrounding trade and geopolitics”, hinting that the trade war between the United States and China, Australia’s biggest trading partner, would drag down global economic activity.
In 2020, the IMF expects the Australian economy to grow by 2.3 per cent, and Greece to also grow by 2.2 per cent.
While the state of the Australian economy may be a cause for concern for newly-arrived immigrants that hoped to escape the Greek crisis by coming to Australia, there are still a number of positives.
In 2013, Greece’s unemployment rate was at 27.4 per cent, five times that of Australia’s current 5.3 per cent. Australia’s debt is at 18 per cent of the gross domestic product, which is nowhere near the levels of Greek debt during the economic crisis that stood at 192 per cent of the GDP and resulted in Athens being unable unable to finance its welfare programs.
Greece had to be bailed out three times. The IMF bailed it out in 2010 and 2012, whereas the European Union financed a third bailout in 2015.
A sense of normalcy is returning to Greece following the turbulence, a brain drain with the exit of almost 500,000 nationals searching for a better life in other countries. On Tuesday, the Greek Finance Ministry announced a primary surplus of 4.479 billion euros for the state budget in the January-September period from a budget target for a surplus of 1.467 billion and a primary surplus of 2.523 billion euros in the same period last year.
The good news for Greece comes at a time when the IMF is predicting a ‘synchronised slowdown’ with global growth decreased to 3 per cent in 2019 from 3.8 per cent in 2017.
Responding to predictions, Australia’s Treasurer Josh Frydenberg confirmed the ‘headwinds’ ahead.
“We have a AAA credit rating, record labour market participation and welfare dependency at its lowest level in three decades,” Mr Frydenberg said.
“We are in our 29th year of consecutive economic growth — a record unmatched by any other developed nation. But the international challenges are a stark reminder of why we must stick to our economic plan which will deliver lower taxes so Australians can keep more of what they earn, more infrastructure to create jobs and boost productivity.”