Australia’s economic growth slowed in the March quarter as rising spending by households, businesses and governments could not counter a dive in net exports.
In the first three months of 2022, gross domestic product rose to an annual rate of 3.3%, the Australian Bureau of Statistics said. That eased from the earlier reported annual pace of 4.2% and compared with about 3% forecast by economists.
The quarterly rate of growth was 0.8% and marked the second consecutive quarter of expansion.
The GDP growth pace was expected to slow after the ABS reported on Tuesday that the nation’s current account surplus had shrunk by $5.7bn to $7.5bn in seasonally adjusted terms for the quarter, shaving 1.7% off overall growth alone.
Domestic final demand, though, contributed 1.6 percentage points to GDP growth, with households making up half of that. Government spending delivered 0.6 percentage points of growth, driven by extra spending on health and in the wake of floods in NSW and Queensland, the ABS said. Business, too, added to their stocks.
“Household consumption continued to drive growth this quarter,” Sean Crick, acting head of National Accounts at the ABS, said. “Following the easing of Covid-19 restrictions, household spending on transport services, hotels, cafes and restaurants, and recreation and culture increased.”
The quarter GDP figures are the first major economic figures to be released since the Albanese Labor government took office after their 21 May election victory.
Attention, though, will focus both on what the March data tells us about momentum of the economy and also whether it will add to the case for another rise in official interest rates when the Reserve Bank board meets next Tuesday.
Australia’s economy shrank less than many other rich nations during the pandemic and its rebound as also been less dramatic than some. The European Union’s economies, for instance, expanded 5.1% in the March quarter from a year earlier, and the UK posting an 8.7% jump.
The US grew at an annual clip of 3.6% although rising interest rates pushed the world’s largest economy into a 1.4% quarter-on-quarter contraction. That fate may extend to other countries as their central banks hike interest rates to curb inflation.
More to follow …