Well, Joe seems to think we're not going to face a recession. And as we know, YouTube
commenters are never wrong. Let's investigate!
So our last video painted a pretty gloomy
picture of the future of the Australian economy by looking at indicators that show that we
may indeed face recession in Australia in 2020. When we showed this list of indicators
to our panel of leading economists. Well, most of them agreed that these indicators do increase
the likelihood of recession. When we asked outright, whether we're going to get a recession in 2020,
only 16% of economist said yes. The vast majority thinks that we won't. So every argument has two sides.
In this video, we'll go through 7 reasons that indicates that we may not face a recession in Australia in 2020.
Number one on our list is the low
Australian dollar value of the Australian dollar compared to the US dollar has been
falling since February. It's at a low in the high 60s and our economists are saying that they expected to fall by
another one or two cents by the end of the year.
Now this is good for a couple of tonnes of businesses in Australia. Firstly, any business that's
manufacturing and exporting goods outside of Australia, or providing services outside of Australia
are going to benefit from this because it means their goods and services are now
cheaper internationally, compared to other countries, so it should increase business
for them and create jobs here. It's also beneficial for tourism, which we'll talk about in point two.
Number two in our list is that Australian tourism is booming. We've seen nearly 10 million
people from overseas visit Australia on short visits over the last 12 months. And that's
a tenfold increase on the same numbers 20 years ago, the tourists just keep coming
On top of this, the Australian dollar being low, means that when tourists come here, their
dollar goes further, they can afford potentially to book a higher quality hotel or go on an
extra excursion. So both of these combined should help create more jobs in the tourist sector.
Number three is that our population keeps growing rapidly. Australia is a very attractive
country, for people looking from overseas because of the sun, the sea and the sun,
We attract a lot of backpackers who come into work and end up staying, we attract a lot of
students who come to study and then stay
We attract a lot of people who come straight out to work because of that, that makes up most of the population
growth in Australia, we've seen 1.6% growth over the last 12 months, that's very high compared to other countries,
it's only 0.7 in the US, for example, and 0.65 in the UK, all of these people coming in, spend more money
create more jobs, then there's people that can fill the jobs. So population increases good for the Australian economy.
Points No. 4 is that the Australian unemployment rate has remained quite low for quite a long time.
It's 5.2% now generally anything between four and six is seen as healthy, it means
the economy is creating sufficient jobs to fill that increase in population. That's people
coming into the country, which is positive for the economy. And if you compare Australia
to other countries internationally, we're doing quite well.
Five on the list is that the government is spending a huge amount of $100 billion.
In fact, in infrastructure their building the West connects in Sydney, they're building finally a rail link between Melbourne
airport and Melbourne city. They're expanding their own network in Perth and a bunch of
other projects. This will create a lot of jobs obviously. And it's worth noting here
that spending on infrastructure is one of the things that helped the Australian economy
avoid a recession during the global financial crisis in 2007.
6. Slightly controversially, overseas student numbers are increasing dramatically in Australia
We're seeing more students come from overseas, especially from Asia, to study in Australian
universities and paying through the nose to do so. That's a lot of funding going into the education industry.
It also means is more people in Australia from overseas who can spend that money back into the economy.
So it's good overall, there's been some comments that Australian universities are over reliant
on students from overseas, but either way it's cash in the economy.
Finally, number seven is that Australia has actually dodged economic bullets three times before
Three recessions, an Asian one in late 90s the Dot com bubble in 2000, and the GFC in 2007
All of these were avoided in Australia due to geographic and economic isolation and
good financial management. We've seen economic growth for 27 years in a row. So there's no
reason why if things get gloomy outside our shores that can't continue here.
So in conclusion, we've seen 7 reasons why we will see recession 7 reasons why we won't
On balance, I'm a little bit unsure of which way to go. I think I'd lean slightly more towards the argument for
recession. I've, for example, decided to hold off on buying property in Sydney
to watch what the housing market does.
We've done a lot more research on this, you can check out further lists of reasons on the insights blog,
which is linked in the description. In the meantime, have we emerged from the long dark night? Are we
going to face positivity or negative in the future? Which argument convinced you the most
please let us know in the comments below. And in the meantime, you can check out all
of our research on finder.com