Posted November 13, 2018 06:27:33The global debt crisis has seen Australia’s GDP drop by almost a quarter in the past five years, and Australia’s net debt to GDP ratio has risen to a record high of over 160 per cent, the Australian Bureau of Statistics said on Tuesday.
“This is a very serious problem and we are on track to surpass the OECD average of 160 per and a full five percentage points below our debt-to-GDP ratio,” Australian Reserve Bank chief economist Chris Williamson said.
“The Australian economy has experienced a sharp fall in net exports, and it is also experiencing a steep decline in the level of investment activity, leading to a decline in net household income.”
A major part of this decline has been due to the strong economic contraction and a reduction in real wage growth, but this has not been reflected in the rise in Australian government debt.
“It is clear that our debt has a disproportionate impact on our economy and our citizens,” he said.
Mr Williamson said Australia was on track for a debt peak of $1.9 trillion by the end of 2019.
“While the Government has maintained that the primary drivers of the increase in Australian debt are external factors, the Government also acknowledges that it has been hit by the impacts of the current financial crisis,” he added.
“However, the outlook for the Australian economy remains positive, and the Government remains committed to maintaining economic growth, creating jobs, and tackling the structural and policy challenges that the global financial crisis has created.”‘
The debt avalanche’The rise in debt has been driven by a rise in the cost of living in Australia, which has driven a fall in consumer spending.
While the cost to pay has fallen significantly, the ABS said there had been a steep increase in the amount of debt that was owed by the public sector.
“Since 2007, total debt in Australia has risen by $1 trillion to $2.2 trillion, while total public debt has increased by $4 trillion to an estimated $6.6 trillion,” it said.
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