GDP data from the Australian Bureau of Statistics (ABS) last week reported that the Australian economy grew by 0.2 of a percentage point over the December quarter, well below the Reserve Bank of Australia’s expectation of 0.5 of a percentage point growth.
Separately, retail turnover edged upwards by just 0.1 of a percentage point in January, the ABS said, following a fall of 0.4 of a percentage point, seasonally adjusted, in the crucial month of December.
GDP growth has now slowed below target for two consecutive quarters, prompting analysts to declare that the economy has fallen into a “per-capita (per person) recession”.
AMP Capital’s chief economist, Shane Oliver, observed: “Coming on the back of just 0.3 [of a percentage point] growth in the September quarter, this is not good news.
“It means growth has slowed to 2.3 per cent over the year to December and, even worse, annualised growth over the last six months has slumped to just 1 per cent.”
Mr Oliver noted that GDP growth would be placed under additional pressure as the housing market downturn intensifies.
According to the latest CoreLogic figures, national dwelling values fell by 6.3 per cent in the 12 months to February 2019, largely spurred by a 7.6 per cent decline across Australia’s capital cities, particularly in Sydney and Melbourne where home prices declined by 10.4 per cent and 9.1 per cent, respectively.
Housing approvals data from the ABS has also revealed that, while increasing by 2.5 per cent in January, approvals are down by 29 per cent year-on-year.
The latest Financial Aggregates data from the Reserve Bank has also shown that, in the year to January 2019, housing credit grew by 4.4 per cent, slowing by 1.9 per cent when compared to growth of 6.3 per cent reported in the 12 months to 31 January 2018.
However, speaking to the media, Treasurer Josh Frydenberg (pictured) cooled suggestions that the economy is heading towards a broader recession.
“[In] the calendar year, GDP growth is 2.7 per cent and actually indicates that the Australian economy is growing faster than any G7 nation except the United States,” he said.
“When it comes to the health of the Australian economy, the fundamentals are sound.”
Mr Frydenberg went on to note that the unemployment rate has fallen over the years to approximately 5 per cent, adding that the real net disposable income has increased by 2.1 per cent over the year.
The Treasurer added: “[Talk] of recession really is inaccurate because what is the best indicator of a recession is what happens to GDP growth, and that has been consistently positive.”
Mr Frydenberg is due to hand down the pre-election federal budget in three weeks’ time on 2 April, with this latest data adding strength to economist’ calls for tax cuts to stimulate the economy.