The Commonwealth Bank has issued a warning about the economy growing at only half the pace of population growth.
Outside of a pandemic, Australia’s economy is already growing at the slowest pace since the 1991 recession, as workplace output keeps going backwards.
Things are unlikely to improve soon with the Commonwealth Bank’s head of Australian economics Gareth Aird predicting the economy grew by just 1.1 per cent in the year to September.
Australia’s biggest bank noted economic growth would be ‘well below the rate of population growth’ pace of 2.3 per cent – proving a big influx of foreigners is doing little to grow the economy.
Successive Australian governments during the past two decades have relied on turbo-charged immigration to boost job creation.
But Australia’s economy has also been in a per capita recession since the March quarter of 2023, where output for every Australian has been shrinking.
‘Against strong growth in population, the national accounts are anticipated to confirm that the per-capita recession continued,’ Mr Aird said.
Productivity is in decline and economic activity is weak despite a big influx of skilled migrants and international students.
The Commonwealth Bank has issued a warning about the economy growing at only half the pace of population growth (pictured is a Sydney branch)
‘The upshot is that productivity growth is expected to once again be poor,’ he said.
In the year to September, 449,060 migrants on a net basis moved to Australia.
That is significantly higher than government forecasts of 260,000 for the 2024-25 financial year made in the May Budget.
But the population surge is failing to translate into stronger economic activity following the most aggressive interest rate rises in a generation.
That’s because high immigration has led to unaffordable house prices, with Sydney’s median level approaching $1.5million.
Productivity is in decline and economic activity is weak, despite a big influx of skilled migrants and international students (stock image of uni graduates)
This means bigger mortgages and borrowers on variable rates who are more likely to financially struggle with every interest rate rise.
‘Indeed real household disposable income per capita has been hit harder in Australia than any comparable economy over the last three years,’ the Commonwealth Bank said.
Australia still has an inflation problem with services inflation soaring by 4.6 per cent in the year to September, with strong population growth continuing to put up rents.
Commonwealth Bank economists are raising concerns about Australia’s sluggish economy growth just nine months after chief executive Matt Comyn told shareholders that high immigration was good for its earnings.
Prime Minister Anthony Albanese and his ministers have been promising to reduce immigration by bringing in fewer international students
‘Undoubtedly, the strong population growth and migration growth is a big tailwind for the Australian economy and clearly the Commonwealth Bank is a beneficiary of higher economic growth,’ he said.
Prime Minister Anthony Albanese and his ministers have been promising to reduce immigration by bringing in fewer international students.
But the Coalition is set to defeat Education Minister Jason Clare’s plan to cap student numbers at 270,000 for 2025.
The Australian Bureau of Statistics is releasing national accounts data for the September quarter on Wednesday next week.
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