According to new figures released by the Australian Bureau of Statistics on Wednesday, the national GDP in the June quarter rose by 0.6 per cent to an annual rate of 2.6 per cent.
This new figure has slightly exceeded the 0.5 per cent economic predictions made by most analysts earlier this year.
Prime Minister Kevin Rudd linked the strength of Australia’s economy to Labors’ economic management programs.
“We’ve grown 15 per cent over the last five to six years,” he said.
“Therefore the economic credentials of this nation, run by this government over this period of time, are strong.”
Economists agree the main determinants of Australia’s successful recovery from the GFC were based on China’s demand for Australia’s resources, an exchange rate depreciation assisted by lower interest rates set by the Reserve Bank of Australia and healthy pre-crisis economy.
However, as to the role of Rudd’s government, their opinions differ remarkably.
According to Professor Ross Guest of Griffith University, the governments intervention using the $95 billion fiscal stimulus package was only “a minor factor“.
“[It] was about three times as big as necessary…and it also dragged out far too long,” he said.
Similarly, Professor Tony Makin regards it as “largely ineffective“.
“Australia is still suffering from a hangover,” he said.
“It contributed heavily to the budget deficit, government borrowing from abroad and public debt which has had lasting negative effects on the economy.”
Conversely, Professor Fabrizio Carmignani from Griffith University considers Rudd’s fiscal policy to be a critical contribution to Australia’s successful survival during the crisis.
“Any different course of action would have been a mistake,” he said.
“There is no urgent need to cut expenditure and bring the budget back in the black. Right now it would generate a sharp contraction.
“I look at Australia with the eyes of a European and what I see is some sort of economic paradise. What I find amazing is that Australians do not seem to realize that.”