Demographic influences on long-term economic growth in Australia

Australia's strong economic performance in recent years has reflected several key influences in the supply side of the economy — including strong growth in the labour force, declining structural unemployment, and rapid growth in productivity. Demographic projections point to Australia's population growth slowing over the next 50 years and, in turn, the population ageing. Under these circumstances, it is likely that the growth in the labour force will decline, perhaps significantly, although the outcome will be influenced by future trends in labour force participation, particularly amongst older workers. These emerging trends in the labour force suggest that, for any given rate of productivity growth, Australia's trend GDP growth could be lower over future decades than during the 1990s, with some of these influences becoming apparent towards the later part of the coming decade. On the other hand, growth in GDP per capita — which is a more appropriate indicator of the growth in living standards — is not expected to decline to the same extent, if at all.