After the longest expansion in its history, is the Australian economic miracle over? The country breezed through the Asian financial crisis, the collapse of the global technology bubble and even weathered a drought that has cut farm output by a third. But, after a charmed 14-year run, output growth abruptly slowed to 1.5 per cent last year and neared zero in the fourth quarter.

The current account deficit meanwhile has reached a 40-year high of 6.4 per cent of gross domestic product. House price growth, after more than doubling in the six years to 2004, tumbled through last year and in some areas, actually fell. Bothered by the prospect of rising inflation, the Reserve Bank of Australia increased the cash rate in March and may raise it again.