Letters: "Booming" economy?

by Michael A. Nelms

News Weekly, February 23, 2002

Sir,

Congratulations on the superb article "Privatisation and the national debt: what is to be done" (News Weekly, February 9). Australian GDP growth is impressive when measured in Australian dollars.

However, as Professor Endersbee points out, clearly the situation is far more sobering when GDP is adjusted for the changing international value of our dollar. In recent years our exchange rate and overseas purchasing power have decreased substantially, so if our GDP were measured in US$ instead of A$, the picture would be quite different.

A superior measure of global economic standing is GDP per capita in relation to US levels (Australian GDP A$ per capita relative to American GDP US$ per capita, both unadjusted for exchange rate variation). On this parameter, Australia has stagnated at 75 per cent, while much of Europe and Asia improved substantially.

Viewing Professor Endersbee’s point in this context, praise for our "booming economy" by politicians and economic commentators can be seriously questioned even further.

Michael A Nelms,
East Malvern, Vic