Originally published by James Harrison
of News24
22.07.2026
Australia’s economic stagnation under Labor is the nation’s “fundamental problem” as a new report shows living standards growth is at the worst point since the First World War.
Poor productivity growth, the Covid pandemic, high inflation and the energy crisis have all contributed to GDP per capita lifting just four per cent this decade.
This puts the 2020s on track to be the weakest decade for growth since the 1910s, according to The Australian Financial Review.
Former Reserve Bank of Australia governor Philip Lowe said this was a worrying sign for living standards.
“Our living standards have stagnated, there has been no net growth in per capita incomes for seven or eight years – that’s after per capita income rising 1.5 per cent a year for nearly three decades,” Mr Lowe told The AFR.
“This is the fundamental economic problem the country faces.”
He called for the government to improve the nation’s business conditions to attract new investment.
“To change it, we require businesses to invest; we need Australia to be a great place for businesses to invest, expand and hire people,” Mr Lowe said.
“It requires some more fundamental public policy reform.”
The former RBA governor’s warning follows the International Monetary Fund downgrading its 2026 growth forecast for Australia earlier this month.
It said the economy will grow 1.9 per cent this year, below its earlier forecast of 2 per cent growth.
This ranks Australia’s growth 18th out of 30 major economies analysed by the IMF.
The fund’s ranking follows Deloitte downgrading its own forecast and warning the nation could face the worst growth since the early 1990s recession.
Official forecasts say Australia’s GDP per capita may decline further throughout this decade.
The RBA said growth will slow from 2.5 per cent in the year to the March quarter to just 1.3 per cent by December.
A decline in GDP per capita during the 2020s follows Australia experiencing per person growth of 25 per cent in the 1990s, 17 per cent in the 2000s and 11 per cent in the 2010s.
AMP’s chief economist Shane Oliver said real wages declining about five per cent since the pandemic were the primary driver of economic pessimism.
“Real wages over the past five years have gone backwards to the tune of about five per cent and it’s very rare to have a situation like that,” Mr Oliver told Sky News.
“You’ve probably got to go back to the 1970s to see something quite that bad.
“And that, I think, is leading to these concerns, that people can see the cost of living issues, their wages are not keeping up.
“They see that as the decline in living standards, and it certainly has been the case over the last five years or so.”
