Although migration is supporting Australia’s sluggish economic development, the country’s per capita shrinkage is hidden. Find out how GDP and household income are affected by population expansion.

According to economists’ forecasts, Australia’s economy will rise weakly overall in the June quarter, but per-person growth will decline.

This shows that the underlying hardship on households is being hidden by migration, which is supporting the economy. Australia is anticipated to have avoided a technical recession with GDP growth of 0.2% in the June quarter and 0.9% for the entire year. Nevertheless, it is the sixth straight quarter of per capita contraction when population growth is taken into account.

The increase in net migration that followed the epidemic, according to economist Saul Eslake, has greatly boosted these numbers. Without this increase in population, Australia most likely would have experienced a protracted recession. Migration has increased GDP overall, but the gains have not been distributed equally.

Families are under additional stress as a result of the migration wave, especially the lower skilled migrants whose numbers have increased relative to supply. The substantial reduction in real household discretionary income is the greatest since 1983.

According to Jeff Borland, a labor market economist at the University of Melbourne, migration initially filled shortages in the labor market, but as the economy changed, its influence decreased. The impact of migration on employment and GDP can present a false image since underlying flaws may be hidden by the increase in total numbers.

The benefits of migration, according to economist Nicki Hutley, are a “sugar hit,” increasing economic activity temporarily but without significantly raising living standards. She underlines, as do Eslake and Borland, that while migration has prevented Australia from going into recession, it is not a long-term answer to issues with inflation and unemployment.

The picture for the economy in the future is still unclear as authorities weigh the risks of a further decline in the economy against their attempts to control inflation. Even if they might have an effect on GDP, any prospective reductions in migration are unlikely to have a major effect on more general economic trends. Rather, the emphasis need to be on long-term plans that guarantee steady growth and deal with the structural problems in the economy.