We’ve landed on two feet, now watch for an overshoot

In the very late 1990s we experienced the 'Tech boom' followed closely by the 'Tech wreck'. Quarter on quarter (QoQ) Gross Domestic Product (GDP), dropped from positive 1.4% in March 2000 to negative 0.9% in March 2001. Prior to 2009, this was the last time Australia experienced a quarter of negative economic performance, as measured by GDP.

In March this year, Australia experienced a 0.7% contraction in growth while the country waited for June GDP figures to see whether we were experiencing a technical recession. June figures came in at +0.4% followed by +0.6% in September and we avoided a recession, but not without good reason.

The easing cycle that led to the Reserve Bank of Australia's (RBA) 'emergency rates' of 3% was swift. The Cash Rate Target was cut from 7.25% to 3% in 12 months. While a democratically-elected federal government on a three-year term will do almost anything to boost near-term GDP and avert recession, the RBA acted under immense local and global government pressure to wind back rates and keep the economy moving. This is not typical behaviour, as the RBA has a publicly-stated objective "of achieving low and stable inflation over the medium term", not maintaining growth or averting a recession.

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