Australia’s economy grew at its fastest pace in almost two years in the fourth quarter of 2015, sweeping aside nagging fears about a coming recession and heightening speculation that a federal election could come early.
Gross domestic product climbed 0.6% in the fourth quarter from the third quarter and 3.0% from a year earlier, the government statistician said Wednesday. Economists surveyed by The Wall Street Journal had expected 0.4% growth from the previous quarter and a 2.5% year-over-year rise.
The cause of the rebound, the WSJ reports elsewhere, has been Australia’s ability to shift from mining to services:
Australia reported surprisingly strong fourth-quarter gross domestic product Wednesday, rising 3% from a year earlier. That’s despite a colossal collapse in the prices of the country’s key exports.
Or what used to be its key exports. The last two months of 2015 were the first time in nearly six years that Australia’s services exports—which include inbound tourism and education—outstripped exports of metal ores and minerals in value terms.
And it isn’t just because the price of iron ore has fallen. Services exports have grown strongly, the main ingredient being a weak Australian dollar.
Chinese tourists and Chinese students have been flocking to Australia in record numbers, and it’s compensating for declining raw materials exports. As the WSJ says, “That is the nimble Australian economy in a nutshell.”
If this continues, other commodities-rich countries will surely try to figure out Australia’s special recipe. Yet, as WRM wrote in his book God and Gold, that may be a challenging task: anglo-sphere countries have an ability to adapt and adopt that the rest of the world still hasn’t entirely been able to mimic.