Australia emerged from the global recession largely unscathed, but now bears the hallmarks of an industrial base hollowed out.
Australia captain Michael Clarke kicks at the turf in frustration during the 2nd Ashes Test. But there are signs that his country's economy may also face problems. Photograph: Tom Jenkins for the Guardian
Australia always take defeat hard and to go into this week's final Ashes test at the Oval three down with one to play is a bitter pill to swallow. But while those wearing the "baggy green" have been losing at Trent Bridge, Lords and Chester-le-Street, the Aussies have at least been able to take comfort from an economy that in recent years has out-muscled the old country in the way that the cricket team did when it was led by Steve Waugh.
The golden years for Australian cricket ended a decade ago. Decline was hard to spot initially although the warning signs were there: a lack of suitable replacements for great players and too great a focus on one-day cricket that resulted in sides being less familiar with the five-day format.
It may prove to be a similar story with the economy. Australia was one of the few developed economies to emerge from the global recession largely unscathed. Growth has been good for a quarter of a century, public debt is low, the banking system proved resilient during the financial crisis and it is one of only a handful of countries that still retains a AAA credit rating.
Success initially was based on some important structural reforms to labour markets and to welfare policy, coupled with macro-economic policies that used inflation targeting to keep increases in the cost of living in check. Australia's banks were better capitalised than those in Europe or the US when the crisis broke.
These reforms in the late 1980s and early 1990s coincided with China's emergence as a global economic superpower. China needed raw materials – coal, iron ore, aluminium – for its rapid industrial expansion and Australia had them in abundance. China now takes 40% of Australian exports..."
