Australia overconfidently approaches awkward age

MELBOURNE, June 28 (Reuters Breakingviews) – Depressing trends lurk beneath Australia’s impressive economic rebound read more . Sharply curtailed migration and falling fertility during the pandemic have exacerbated the demographic challenges of an ageing population, according to the government’s first so-called Intergenerational Report in six years. The study, released on Monday, attempts to forecast long-term budget trends; it projects that the ratio of working-age people to those over 65 will tumble from 4 to 2.7 over the next 40 years.

While acknowledging that immigration contributes to economic growth, Prime Minister Scott Morrison’s administration also slashed the cap on newcomers read more before Covid-19. He seems to be counting in part on labour productivity growth to make up the difference, which the analysis assumes will rebound to a 30-year average of 1.5% a year after growing at only 1.2% per year over the past decade. Other developed economies have been revising down their productivity estimates, and in fact Australia’s last intergenerational report overshot on fertility and population. This one could be excessively optimistic too. (By Jeffrey Goldfarb)

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Editing by Pete Sweeney and Katrina Hamlin