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Australia’s Economic Growth is Powered By International Students: UBS

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Australia is certainly witnessing economic growth, but according to the UBS Australian economics team, this is growth is particularly fueled by the large inflow of international students each year in Australia.

Below is a nifty chart compiled by UBS that looks at the composition of Australian population growth over the past four decades, looking specifically at the impact of net overseas migration and natural population increase.

UBS-Australian-population-increase-July-2016

UBS explains:

80% of that prior slowing in population growth reflects reduced net overseas migration, while the other 20% is due to slower ‘natural increase’. For net overseas migration, this has slowed from 238k to 177k annually between 2012 and 2015 (down 61k, & from 1.0% to 0.7% of the population), while Australia’s ‘natural increase’ has slowed from 163k to 149k between 2012 and 2015 (split relatively evenly between more deaths & less births).

So what has driven this slowing in net overseas migration? Interestingly, it almost entirely reflects more Australian leaving than any fall in permanent migrant arrivals to Australia (Figure 3). Indeed, between 2012 and 2015, annual overseas arrivals have only slowed from 493k to 483k (only 0.04% of population growth), whereas Australian’s migrating overseas have risen from 256k to a record 306k between 2012 & 2015 (a more significant 0.21% of population growth).

Although many Australian natives have migrated outside the country, the household consumption expenditure — the largest component of the Australian economy — managed to grow 3.0% year-on-year in the 12 months to March thanks to the record-breaking influx of international visitors and students studying on Australian shores.

This rapid influx is helping to support economic activity through increased consumption, higher levels of employment and increased demand for residential housing, among others.

UBS is currently forecasting real GDP growth in Australia of 2.7% in 2016. Given the mining infrastructure capital expenditure (CAPEX) boom will continue to drag on economic growth over this period. Essentially, with more people residing in Australia, international inflow is helping to assist economic activity and employment growth despite more Australians than ever before migrating overseas.

Bhagyeshwari Chauhan

Bhagyeshwari Chauhan

Engineering grad; Astronomy enthusiast; Avid reader and now a writer. Currently writes about Technology, Social Psychology, Astronomy, Business trends and Current Affairs
Bhagyeshwari Chauhan

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