Sydney, Australia – In the years around the Global Financial Crisis (2007-2009), Racheal Clayton was a young student. Back then, Australia’s economy stood out, avoiding recession while other nations struggled. Fast forward to today, and Clayton, now 22, has stepped out of the classroom and into a very different economic landscape.
Australia’s economy is growing at its slowest rate since the early 1990s, not counting the pandemic years. The gross domestic product (GDP) increased by only 0.8 percent year-on-year during the first three quarters of 2024. In comparison, the U.S. and the Eurozone saw expansions of 3.1 and 0.9 percent, respectively. The lack of growth is even more stark when adjusting for population increases driven by immigration, which has kept Australia from slipping into recession.
Clayton graduated from university in 2022 and now works full-time in public relations. However, like many her age, she’s worried about finances. Despite living at home rent-free, she juggles a part-time job as a personal trainer to cover everyday expenses. “Even with a full-time job, I feel the pinch if I take a break,” she shared, highlighting the tight financial squeeze faced by many young Australians.
The economic situation worsened after COVID-19. In December 2022, inflation peaked at 7.8 percent while wages stagnated. According to the OECD, real wages in Australia were still 4.8 percent lower than pre-pandemic levels by last year. This has made it nearly impossible for young people like Clayton to save for a home in a country known for its high property prices.
With the expectation of home ownership fading, Clayton and her peers seek financial stability in other ways. “Being financially safe feels like a distant goal. We just aim to make it work day by day,” she noted.
After an impressive 28-year growth streak following the recession in 1992, Australia’s economy faced setbacks post-COVID. High interest rates, declining productivity, and weak demand for exports have slowed growth. Although not officially in recession, many Australians feel financially strained, as bills pile up even for those in stable jobs.
A survey by the Salvation Army revealed disturbing trends: one in four Australians worried their kids might not receive holiday gifts, and 12 percent were anxious about food shortages for their children.
Many families are feeling the squeeze due to rising mortgage rates. The Reserve Bank of Australia (RBA) initially cut rates to help during the pandemic but has since raised them to 4.35 percent to curb inflation. This shift has put further pressure on budgets.
Economists like Matt Grudnoff from the Australia Institute have flagged the low consumer spending as a major issue. This slowdown, coupled with a housing supply shortage—estimated to reach over 100,000 homes by 2027—continues to drive up property costs.
In response to the rising costs, the government is reconsidering immigration levels, with plans to reduce net migration to pre-pandemic figures. While this aims to alleviate some pressures, many experts argue that migration has actually fueled economic growth, and not addressing underlying issues may harm living standards longer term.
Independent economist Nicki Hutley believes Australia must shift focus towards productivity and strategic investments. Unlike other nations that invested in sustainable sectors during the pandemic, Australia spent without a long-term vision. “We need to diversify our economy and build stronger frameworks for investment,” she stressed.
As young people like Clayton navigate this challenging landscape, the hope is that Australia can reestablish a healthy economic trajectory, securing a better future for the next generation.
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Economy, Business and Economy, Asia Pacific, Australia
