Australia is today expected to set a world record for the longest period of continuous economic growth, surpassing the former record of 26 years set by the Netherlands.
This remarkable era of growth has meant an entire generation of Australians has never experienced a recession. Nor have they experienced high unemployment or double-digit interest rates. Unemployment is now at 5.9 per cent and the cash rate, set by Australia's central bank, the Reserve Bank, is at a record low of 1.5 per cent.
The long growth spurt is surprising, given the gloomy forecasts following the 2008 global financial crisis and the ensuing end of Australia's decade-long mining boom. Indeed, the Dutch streak of fortune ended owing to the financial crisis.
Experts credit the growth to the nation's flexible economy - including the floating of the dollar in the 1980s and the reduction of tariffs - as well as the information technology revolution, which boosted productivity and created jobs. Also, Australia has benefited from its abundant resources, particularly during the 2000s as demand from China fuelled a surge in prices of commodities.
Australia's economy has drastically changed in the past 26 years, according to University of New South Wales economist Richard Holden. The most notable changes, he said, were the growth of the financial services and banking sectors, the impact of the Internet and technology, and changes in the retail sector, including longer weekend opening hours.
"It is an extraordinary thing for Australia to be about to set that record," he told The Straits Times.
There is a hugely populist threat to the economy and no desire by politicians to take short-term pain for long-term gain.
PROFESSOR RICHARD HOLDEN, on the lack of political will to pursue meaningful and necessary change on issues like scaling back incentives for investors in property.
"One of the key drivers was the opening up of the economy with the Hawke-Keating reforms in the 1980s (under then Prime Minister Bob Hawke and his treasurer Paul Keating). In 1983, Australia still had a fixed exchange rate and a fairly closed economy, with industrial problems, and a banking sector that was not very open to competition."
Professor Holden said the unfixed Australian dollar had been a "shock absorber" that helped to adapt to sudden changes in commodity prices. Since the height of the recent mining boom, for instance, the value of the Australian dollar has fallen from a high of US$1.10 in 2011 to US$0.76, a change that has helped to boost non-mining exports and services such as tourism and international education.
But celebrations over the world record are unlikely to last long.
Most economists believe Australia now faces serious economic challenges and is extremely unlikely to notch up another 26 years of growth.
These challenges include record low interest rates, increasing public debt, low wage growth and inflation, as well as a surge in housing prices that many believe is a bubble that is set to burst. Household debt has reached record levels of 187 per cent of income, one of the highest in the world along with Denmark and Switzerland.
Analysts believe the economy is also at risk from international developments, including the impact of Britain's exit from the European Union and Washington's potential protectionist shift under President Donald Trump.
There have been recent signs of a protectionist tilt, too, in Australia, especially with the growing popularity of minor parties like One Nation, led by the right-wing firebrand Pauline Hanson. Australia has been highly dependent on surging foreign investment in recent decades and could suffer if barriers are raised and foreign capital is rejected.
Prof Holden said he was worried about a lack of political will to pursue meaningful and necessary change on issues like scaling back incentives for investors in property. He said this lack of will may have resulted - somewhat ironically - from the fact that the modern generation of policymakers has "never seen a recession".
"There is a hugely populist threat to the economy and no desire by politicians to take short-term pain for long-term gain," he said.