Australian Slowdown: Economy shrinks per-capita for second consecutive quarter

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02:29

There are signs that Australia's economy, once heralded as one of the most consistent in the world, is in trouble. Economists say the country is in the midst of a per capita recession, where the growth of the economy isn't keeping up with the increase in population. Greg Navarro explains.

Australia's economy enjoyed almost 3 decades of uninterrupted growth, which helped protect the country against many of the impacts from the Global Financial Crisis. But economists fear that run of economic prosperity here may be coming to an end.

WARREN HOGAN, PROFESSOR UNIVERSITY OF TECHNOLOGY SYDNEY "This is a feeling like this economy is not delivering for the broader citizenry, that we are not getting ahead, that we are not moving forward, the thing is stagnant."

The problem is that the country's economy is growing slower than the population, which economists call a per capita recession. Wage growth began to slow during the GFC and has failed to keep pace with the rate of inflation.

WARREN HOGAN, PROFESSOR UNIVERSITY OF TECHNOLOGY SYDNEY "That wage growth of 2.3% really means that your real wage, your living standard, your purchasing power, isn't going up by very much."

"Today we are here in the seat of Banks."

The Australian Council of Trade Unions is trying to highlight the impact of a slowing economy on its workers.

MICHELE O'NEIL, PRESIDENT ACTU "They are just not earning enough to be able to cover the rising costs of things like utilities, the cost of gas, electricity, food costs, petrol costs, childcare costs."

GREG NAVARRO SYDNEY "There's a sector of the country's economy that is proving to be both a symptom and part of the problem when it comes to a per capita recession, the housing industry."

After years of accelerated growth, house prices are falling, especially in Sydney and Melbourne.

SONG SHI, ASSOCIATE PROFESSOR SCHOOL OF BUILDING ENVIRONMENT UNIVERSITY OF TECHNOLOGY SYDNEY "When the economy slows down you will see housing prices will decline over time but when the housing market slows down the natural impact will be on the economy, so the economy will also go down."

With a federal election expected just weeks away, the government released a budget with measures aimed, in part, at stimulating spending. And the Reserve Bank of Australia is now widely tipped to be considering another cut to the country's already record low-interest rate of 1.5%.

WARREN HOGAN, PROFESSOR UNIVERSITY OF TECHNOLOGY SYDNEY "All aimed at trying to stop that trigger from a slowing economy to an economy that is starting to shed jobs."

Because economists say, Australia's low unemployment rate, at around 5%, is one of the key factors that's helping to keep the economy from slipping into a full-blown recession. Greg Navarro, CGTN, Sydney.