Australia’s economy surprisingly slowed in the September quarter, as the toll of higher interest rates hit consumers and trade turned negative.
Gross domestic product expanded 0.2% in the September quarter compared with the previous three months, marking an eighth consecutive quarter of growth, the Australian Bureau of Statistics said on Wednesday. Economists had forecast GDP growth would quicken to 0.5% from 0.4% in the June quarter.
Compared with the September quarter a year ago, GDP was 2.1% larger. Market consensus was for the annual pace to slow to 1.9% from 2.1 in the April-June period.
The ABS’s national accounts provide a broad view of the state of the economy ahead of the Albanese government’s mid-year economic fiscal outlook expected to be released by treasurer Jim Chalmers in about a week’s time.
Many of the GDP components – such as a surprise current account deficit of $158m in the September quarter compared with a $7.8bn surplus in the previous three months – had been released by the ABS in time for yesterday’s Reserve Bank cash rate decision.
The RBA opted to keep its key interest rate unchanged at 4.35% at its final board meeting for 2023. Its latest set of forecasts, released last month, anticipated the economy avoiding recession, an assessment given ballast with today’s GDP figures.
Still, today’s weak GDP figures suggest the economy was losing momentum even before the RBA snapped a run of four months of holding its cash rate steady by raising its cash rate to 12-year high of 4.35% in November.
The aggregate figures also include the additional demand from about half a million extra people joining the economy in the past year through immigration. On a per-person basis, GDP shrank in the September quarter for a third quarter in a row, extending the “per-capita recession”.
While the decline in net exports lopped 0.6 percentage points from the quarterly growth tally, increased demand from the public sector clawed back about half that tally. Consumer spending was one of the key areas of uncertainty for economists.
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