Doesn't the GDP growth of Australia prove Economics wrong?
No, it does not prove economics wrong. The Gross Domestic Product rose in fact by 0.4% against the previous three months. However, this may in fact hide the current weakness in the Australian economy. The increase in GDP is only due to massive government cash handouts of about 12 billion AUD to low income earners and record interest rate cuts which fueled consumer spending. As the Australian prime minister said very clearly, without the government intervention, the Australian economy would have contracted by 0.2% in the same period.Economic indicators do not justify the GDP increase and show that the global recession is hitting the Australian economy: Production in the mining industry fell by 1.5% in the first quarter, manufacturing fell by 3.3%, equally, construction fell by more than 3% and imports fell by 7%. Unemployment reached a record 5.7% in March and is expected to increase to 8.5% by early next year. Against all expectations, Australia posted a trade deficit in April of 91 million AUD, with exports falling 11% since March.In summary: the economics are not wrong, the figures just hide how the global recession and the slump in demand have hit the Australian economy.