Australia’s chief business lobby has called out a ‘lopsided’ economy in need of structured policy action by government, as data reveals that economic growth slowed as 2017 came to an end.
Data from the Australian Bureau of Statistics (ABS) revealed the economy grew by just 0.4 per cent in the December quarter, seasonally adjusted, taking the year-on-year rate to 2.6 per cent.
While the ABS noted a slight “rebound” in household consumption, most notably in spending on eating out as well as recreation and culture, private investment fell while new engineering construction slumped sharply.
Exports also took 0.4 percentage points off GDP for the quarter.
Interestingly, though, employee compensation surged by 1.1 per cent – the fourth continuous quarter of growth.
“The increase in wages is consistent with stronger employment data reported in Labour Force, as well as a lift in the growth rate in the wage price index observed over the past two quarters,” said ABS chief economist Bruce Hockman.
However, Adam Carr, chief economist at the Australian Chamber of Commerce and Industry (ACCI) said the figures were “soft”, noting that trend growth over the previous 12 months slowed from 2.9 per cent to 2.4 per cent.
“This is a soft result and while we think the economy is still building momentum overall, the fact is that growth is below trend and quite patchy,” he said.
According to Mr Carr, government spending has been propping up the economy, surging 1.4 per cent in the December quarter and 4.1 per cent over the year. This compares to a virtually stagnant 0.1 per cent quarterly rise in private demand.
“There was some volatility within the figures but even so, it’s that kind of lopsided growth that suggests the economy needs to rebalance,” said Mr Carr.
“We need to see it rebalance away from the public sector and more toward private enterprise. This is critical if we want to see productivity, jobs and incomes increase over time. How can we do this? By helping mums and dads and by helping business with their bills.”
He added: “First up we need more action to get energy costs down. Policy makers need to encourage private spending by reducing the tax bill. We have to ensure that taxes aren’t weighing too heavily on households and business. I think a message in these figures is that they are.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.