Australia ranks among the richest countries in the world. So why do we feel ‘poor’?

Financially speaking, Australians live in a ‘lucky land’. Our country is home to the twelfth largest economy, which is thriving in part because we are a global resource power.

Why does it sometimes feel like we don’t have much money?

According to Diana Mousina, AMP’s deputy chief economist, crushing household debt is to blame.

Average household debt is about 210 percent of disposable income.

This is much higher than comparable economies such as the US, New Zealand, Canada and Japan

The only countries with higher debts are Norway and Switzerland.

Mousina said this is because of our huge mortgage market.

Rising loan repayments are putting pressure on Australians at a time when everything else is also becoming more expensive.

“Australians have a strong preference for home ownership, both in terms of housing and investment,” Mousina says.

‘High debt levels increase vulnerability.

“Households are more exposed to rising interest rates, which increase repayment costs, and to economic downturns, where job losses can make servicing debt more difficult.”

On the other hand, our tendency to own large, appreciated assets will only be a boon in the long run.

Stocks of wealth such as land and real estate “provide a cushion” for the debt hanging over families, Mousina explained.

“On this measure, Australia looks strong, with household wealth at around 513 per cent of income,” she added.

And despite the alarming statistics, Mousina says Australian household debt has actually declined in recent years.

While successive interest rate hikes and the threat of a looming recession have been a blow to consumer confidence, the economist has a bright outlook for how we can weather any future economic pain.

Perhaps the biggest problem is our distorted perception

“Have Australians become so used to the ‘good times’ that we don’t even remember what tough economic times are like?” Mousina asked.

“The reality is that Australia remains a high-quality economy, with strong institutions, a stable financial system and relatively moderate policy settings.

“Maybe the problem is not just the economy itself, but also how we perceive it.”

How does Australia rank on the global happiness scale?

We may have a lot of personal debt, but Australians are much happier than many of our neighbours.

According to the World Happiness Report, Australia is the 15th happiest country in the world – ahead of countries such as the US, Germany, France, Singapore, Italy and Canada.

The report ranks countries based on their GDP, freedom, social security systems, job security and perceptions of corruption.

Given Australia’s healthy happiness scorecard, Mousina said it is “somewhat surprising” that economic sentiment is so negative.

“Based on these measures of living standards, Australia comes out in relatively good shape overall – a country with strong fundamentals and solid long-term prospects.”

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