By Scott MaloneA new report from the Resolution Foundation reveals that as many as 1.2 million people could be out of work in Australia’s most indebted state.
As the global financial crisis took hold, it left an economic hole that has been slowly growing over the past few years.
The resolution report, ‘The New Debt Crisis: The Rise and Fall of the Global Financial Crisis’, found that over the last three years, Australia has been the worst-performing economy on the planet, with Australia’s gross domestic product (GDP) declining by over 10 per cent.
The report finds that the “financialisation” of the economy has caused many Australians to feel financially vulnerable and are “failing to protect themselves”.
“A major cause of this is the financialisation of the Australian economy, in which Australians are becoming increasingly reliant on credit cards and other debt-driven products,” it says.
“In fact, debt-related payments are a major factor in people’s financial vulnerability.”
The report also highlights that Australia has become the second-most indebted state in the world.
“As a result of financialisation, Australians are increasingly unable to protect their financial assets from being eroded by interest rates, inflation and other financial shocks,” it continues.
“These factors have been the primary cause of a sharp rise in the debt burden in the past decade, rising from just over $20 trillion to nearly $42 trillion.”
The debt-laden state of the country is not just hurting Australians who have been impacted by the financial crisis.
The national debt as a percentage of the GDP is now more than 10 times higher than in the United States, the report says.
It’s also now more expensive than the global average, with the national debt now exceeding that of Italy, France, Germany and the United Kingdom.
Australia is also the fifth-most expensive country in the OECD, according to the report.
Australia’s total national debt stands at $10.6 trillion.
While the country’s GDP is currently projected to grow by 6.1 per cent this financial year, it is projected to decline by 2.6 per cent in 2019, according the report, which is likely to see the debt balloon even further.
“A new crisis is looming for Australia’s economy and the country must respond,” the report states.
“This includes a strong and sustained recovery of the economic health of the Commonwealth’s economy.”
It also recommends that Australia “take a holistic view of its economic recovery” and consider a debt-free budget that provides an adequate return on investment.
“The recovery must be sustained and sustained in the medium and long term,” it states.
Topics:economics-and-finance,financial-crisis,financial,government-and/or-politics,government,australiaFirst posted October 08, 2019 07:56:32Contact Scott MaloneMore stories from New South Wales