Australia’s economy is continuing to slow, latest ABS figures show, although there are hopes that tax and interest rate cuts will deliver more positive figures in the current quarter.
The Bureau of Statistics revealed on Wednesday (4 September) that the nation’s economy grew by 0.5 of a percentage point in the June quarter, taking annual growth down to a rate of 1.4 per cent.
ABS chief economist Bruce Hockman said that growth is coming from offshore, with the domestic economy remaining steady.
“Strength in mining-related activity was seen across a number of measures in the economy,” he said, with mining profits surging by 10.6 per cent.
Meanwhile, government spending continues to prop up the domestic economy, particularly in the areas of health, disability and aged care.
According to the ABS, household expenditure remained “relatively subdued” in the June quarter at 0.4 of a percentage point, while dwelling investment fell by 4.4 per cent on the back of previous falls.
Shrinking GDP per capita
While the overall GDP figure remained in positive territory, the “per-capita recession” expression flagged by commentators late last year could be set for a comeback.
The ABS’ GDP per capita measure went backwards over the past year to the tune of 0.2 of a percentage point.
This measure of growth was unchanged in the June 2019 quarter, on the back of a modest 0.1 of a percentage point in the March quarter.
GDP per capita has been negative in two of the past five quarters (the September 2018 and December 2018 quarters) in addition to the no change recorded in the most recent quarter.
Disappointing, but outlook ‘more positive’: ACCI
Despite the results, the Australian Chamber of Commerce and Industry (ACCI) suggested the current quarter could be much brighter when its figures are revealed later in the year.
“While the June quarter GDP growth is disappointing, the outlook is more positive,” said CEO James Pearson.
“The RBA has lowered the cash rate twice in recent months to a historic low of 1 per cent and the government delivered personal tax cuts in July.”
Mr Pearson said that subdued growth for the June quarter “was in line with expectations, given the uncertainty in the lead-up to the election in mid-May and weak housing demand”, but that the economic environment has changed markedly in the current.
“We expect the cash rate cuts and personal tax cuts to have a noticeable stimulatory impact on economic growth in the September quarter,” he said.
“They will put more money in people’s pockets, which will encourage households and businesses to spend and invest more. As the RBA noted [on Tuesday at its monthly board meeting to determine official interest rates], we are already seeing a turnaround in major housing markets.
“Also on the plus side, the importance of international trade was apparent in the current account figures released by the ABS yesterday. This data showed Australia achieved a current account surplus of $5.9 billion in the June quarter 2019, the first surplus since June 1975. The trade in goods and services component of this achieving a record surplus of $19.9 billion.
“This reinforces the importance of Australia being an open, trade economy.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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