Morrison has job cut out managing Australian economy

AUSTRALIAN Prime Minister Scott Morrison's unexpected electoral victory over the weekend should be another reminder to opinion pollsters that their craft is a rough-and-ready one that, like all measures of sentiment, can go awry.

So, like Donald Trump's win in the 2016 US presidential election, Mr Morrison's Liberal-National Coalition managed a narrow victory over the rival Australian Labor Party (ALP). Every opinion poll had predicted the ALP would win.

At the hustings, Mr Morrison mounted a shrewd strategy of attacking the ALP's big tax-and-spend policies while offering a very small target of his own: another three years of the status quo. And it worked. Nevertheless, the Liberal Party leader will face major challenges during his term of office, the most pressing of which will be the state of the Australian economy. Australian leaders are rightly proud of the fact that the country has not suffered a recession since 1991. But the portents are not looking good now. On a quarterly basis, consumer prices were flat in the first quarter of 2019, after a 0.5 per cent rise in the previous three months. Flattish (or worse, falling) prices could be symptomatic of an economy operating below its potential, and would be a worry if entrenched as a deflationary spiral. If prices start falling across the board, consumers tend to stop spending and wait for prices to hit bottom. That could trigger a recession and put people out of work.