Sydney, Australia – When Racheal Clayton attended primary school in Sydney, Australia at the height of the 2007-2009 Global Financial Crisis, Australia's economy was the envy of governments around the world.
Unlike any other developed economy, Australia has emerged from the recession since the Great Depression without collapsing.
Today, 22-year-old Clayton navigates the world of work instead of class, and wealth where his star shines brightly across the globe.
Rather than the envy of the developed world, Australia's economy has been growing steadily since the early 1990s, barring the COVID-19 pandemic, undercutting many of its peers.
Australia's gross domestic product (GDP) grew by 0.8 per cent annually in the first three quarters of 2024, compared to growth of 3.1 and 0.9 per cent in the United States and the Eurozone respectively.
Without the rise in immigration, Australia would have fallen because its population growth has been negative for seven consecutive quarters.
Like many of his peers, Clayton, who will graduate from university in 2022, is pessimistic about the state of the country's economy.
Although he works full-time in social services and lives at home with his parents, he has been involved in the sport part-time as a personal trainer to help cover his expenses, such as food, bills, insurance and running costs. car.
“I am very lucky to stay at home. So it's not like I have to pay rent, but I have to pay other things in life,” Clayton told Al Jazeera.
He said: “When I take a break from my part-time job, I struggle.
Like many countries, Australia's prices rose after the COVID-19, inflation rose to 7.8 percent in December 2022, while wages stagnated.
While wages in the OECD have risen by around 1.5 per cent since 2019, real wages in Australia were still 4.8 per cent below the pre-pandemic level last year, according to OECD data.
Clayton said he doesn't expect much from housing because it's hard to save money and property is unaffordable in Australia, which is one of the most expensive markets in the world.
“I think (my generation) is more focused on finding security in other ways,” he said.
“Just being safe (money) is like having no luck, so you can use your money as much as you can.”
After the recession of 1992, Australia recorded 28 consecutive years of uninterrupted economic growth until the country was hit by COVID in 2020.
Since recovering from the pandemic, the economy has struggled to recover from high interest rates, rising productivity and declining demand for Australian exports such as steel.
Although Australia does not fall under the law, it is very different from those who are struggling to pay their debts despite having a full-time job and good income.
Before Christmas, a survey conducted by the Salvation Army Australia showed that one in four Australians were worried that their children would miss out on presents and 12 percent were worried that their children would miss out on food.
A major financial crisis was caused by the massive housing foreclosures caused by successive interest rate hikes by the Reserve Bank of Australia (RBA).
After lowering interest rates to near zero in response to the pandemic, the RBA raised the rate to 4.35 percent in a series of moves aimed at tackling inflation.
In September, Treasurer Jim Chalmers pointed to higher interest rates as the main reason for the cuts, saying the rate hikes were “damaging the economy”.
Matt Grudnoff, an economist at the Australia Institute think tank, said the RBA played a “huge role” in the country's financial crisis.
“We know that consumer spending is very low in Australia at the moment, and that makes up half of GDP. And you know, when Australian consumers don't spend, the economy will grow slowly,” Grudnoff told Al Jazeera.
Grudnoff said the ongoing housing shortage was the root cause of the problems faced by many Australians.
Australia is expected to face a housing shortage of 106,300 by 2027, according to a report by the National Housing Finance and Investment Corporation (NHFIC).
Grudnoff said the shortage, which is driving up home prices and rents, has been a problem for years but has hit the nation after the pandemic.
“I think it's because we haven't had inflation (before),” Grudnoff said.
“The reality is that until you face a problem, it's often easier to ignore problems,” he added.
With the federal election looming next year, politicians from both major parties will look to reduce immigration as a way to ease life's hardships.
Faced with a severe shortage of workers after the pandemic, Australia loosened its barriers to international students and immigrants in 2022, allowing 547,200 arrivals the following year to migrate.
Faced with growing pressure on housing and informal settlements, the Labor Party government in 2023 announced that it would reduce the number of immigrants to start the global pandemic and the following year decided to reduce the number of international students.
While the government estimates total immigration in 2024-2025 to come in at 340,000 – about 200,000 fewer than in 2023 – this would be 80,000 more than the target.
Trent Wiltshire, deputy director of the economic prosperity and democracy program at the Grattan Institute, said that immigration has helped the economy not because of its weaknesses.
“Our per capita living standards have been going backwards recently and have been stagnant for a while now. So it was a problem pre-COVID as well, the fact that our economy was not as good as it should have been. So we need a change to increase productivity to start climbing,” Wiltshire said.
“It's not the cause of weakness,” Wiltshire added, referring to the effects of immigration on growth. “So there is an important difference.”
In late December, the Labor government released its mid-year economic outlook, forecasting GDP growth of 1.75 per cent and a deficit of $26.9bn in 2024-25, the first since the party came to power in 2022.
Nicki Hutley, an independent economist, said many of Australia's problems stemmed from a lack of productivity growth and a “hard and sensible debate on tax and revenue”.
Hutley said successive governments' spending and investment strategies have laid the foundation for the current economic weakness.
While other countries used the pandemic as an opportunity to invest in future initiatives such as green energy, Australia spent money without a long-term vision, he said.
“We spent money on building houses that could have been built. We didn't, we didn't use the money wisely, and now we're back where we started,” Hutley told Al Jazeera. “And at the end of the day, Australia is a small, open economy that depends on other countries like China. We have to make a lot of distinctions. “
“And I think that's the lesson that every country has already taken after the COVID, (which) is to sell the products that you export and export markets,” he added.
“But you also have to make sure that you're promoting investment and that you have the right mechanisms in place to do that.”