For the second consecutive quarter, Australian economic growth lingered at the bottom of the activity curve, with a 0.2% increase from the September quarter and a 1.5% growth over the year to December.
The data in the December quarter’s national accounts showed a slightly more positive outlook compared to the previous quarters, with encouraging signs on inflation, productivity (up by 0.5% in the quarter), a boost in savings, a significant rise in population, favorable terms of trade, and increased business profits, particularly for miners.
However, persistent challenges remained, including weak household spending and income, largely attributed to high levels of inflation and interest rates.
Despite these challenges, the economy’s performance in the three months to December, as well as throughout 2023, was bolstered by a substantial increase in population and the robustness of the job market.
The strength of the job market has not only sustained retailing and consumption but also contributed to increased tax collections, leading to consecutive budget surpluses for the federal government, aiding efforts by the Reserve Bank to curb inflation.
Overall, the national accounts reflected a predictable scenario with no significant new problems identified.
Kathleen Keenan, the head of national statistics at the Australian Bureau of Statistics, noted that growth remained steady in December but showed a gradual slowdown across each quarter in 2023.
Government spending and private business investment were the primary drivers of GDP growth in the quarter, as highlighted in the Bureau’s report on the September quarter’s national accounts and GDP figures.
Despite the challenges, there were some positive contributors, including a rise in exports of iron ore and coal, a decrease in imports and overseas travel by Australians, and continued business investment.
However, growth in per capita income declined for another quarter, largely due to a significant rise in population, driven by high levels of immigration and foreign students.
Ms. Keenan further explained that while government final consumption expenditure slowed in the quarter, it was still driven by increased spending on household benefits, medical products, and services, as well as higher employee expenses.
Net trade contributed positively to GDP growth, with imports falling and exports maintaining resilience, albeit with some declines in specific sectors.
Despite challenges, there were some positive indicators, such as a rise in household spending on essential items and an increase in compensation of employees, driven by wage growth and government payments.
Overall, while facing ongoing challenges, the Australian economy demonstrated resilience and some positive momentum in key areas during the December quarter.