Australia: On top of the Economic World

Australians take great pride in their sporting achievements, and have punched well above their weight in a wide range of sports beyond their inherent world dominance of cricket and rugby. Less noticed is the outstanding "world best" economic performance over the past seventeen (yes 17) years. Since 1992 Australia has not had a recession, even as Asia was gripped by the Asian financial crisis in 1998 and as North America, Europe and most of the industrialized world teetered on the edge of collapse as the United States generated financial crisis hit the world in late 2008.

It is a remarkable achievement, which as the Australian Financial Review points out, has it's genesis in luck and good economic management by both labour (left of centre) and liberal (right of centre) governments. With significant forsight, the labour Hawke-Keating governments reformed the banking sector, liberalized trade and the labour market, and established a compulsory superannuation system in the 1980's. These reforms, as well as very effective countercyclical fiscal and monetary economic management provided the structural basis for withstanding the negative effects of the Asian financial crisis in 1998, and the United States generated world financial and economic crisis that followed a decade later in 2008.

The Howard liberal government in the late 1990's  until the mid 2000's under Treasurer Peter Costello managed to gradually build a huge budget surplus, despite a significant level of spending, thanks in part to minerals trade with China. The surplus was critical to implementing the massive fiscal stimulus program that prevented the economy from sliding into recession in late 2008, when the rest of the world was hit by the United States generated financial and economic crisis. The Rudd labour government acted swiftly with a massive fiscal stimulus program in late 2008, to fight the global crisis, and was instrumental in encouraging China and other countries to follow suite with coordinated fiscal stimulus programs. It worked. Australia avoided a recession, thanks to the quick action of a newly elected liberal democratic government.

Australia is now in the enviable position of having a sound financial and economic basis for continuing it's record of uninterupted economic growth for the foreseeable future. China is Australia's largest trading partner,will likely become the dominant economy in the world in a decade, and will rely on Australia's rich resources to underwrite it's growth.

Luck or good economic management. It doesn't matter. Australia in economics, as in sport, is punching well above it's weight.