The Times Australia
The Times World News

.
The Times Real Estate

.

the 6 graphs that show Australia's economic growth shrinking

  • Written by John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society, University of Canberra
the 6 graphs that show Australia's economic growth shrinking

The latest national accounts tell us Australia’s economy grew by just 0.2%[1] in the three months to March.

It’s the weakest growth since the economy shrank during the COVID lockdowns, and, before that, the weakest economic growth since December 2018.

If economic growth continued at that pace for four quarters, the annual rate would be 0.8%, the weakest outside of a recession.

And the quarterly pace is shrinking. Economic activity grew 0.8% in the June quarter of 2022, 0.6% in the September and December quarters, and most recently, in the March quarter, only 0.2%.

The earlier stronger growth means gross domestic product is 2.3% larger than a year ago, a figure that looks set to become the highest for some time, but which looks less impressive when set aside the 2% growth in population.

Per person, gross domestic product shrank by 0.2%, the most outside of a COVID lockdown period since 2016.

The main drivers of economic growth were business investment and exports of services.

But there was weakness in consumer spending, with spending on discretionary items slipping.

Households were only able to increase their essential spending (on things such as fuel, transport and rent) by saving less. Australia’s household saving ratio, the proportion of income saved, fell to just 3.7% – the least since 2008.

Mortgage interest expenses doubled over the year to the March quarter, and dwelling investment fell by 1.2% in the quarter, and 4.4% over the year.

Business investment increased, climbing 2.4% in the quarter, but much of it was imported capital equipment, which detracted from GDP. Exports increased, with the return of international students to Australian campuses an important contributor.

Who is getting what national income there is?

There has been some debate about how the national pie is being shared. Related is an argument about whether it is greedy businesses or greedy workers that are responsible for higher inflation.

Australian Council of Trades Unions Secretary Sally McManus points out[2] that labour’s share of GDP is near its lowest since the quarterly national accounts began in 1959. The profit share is near its highest.

The Australia Institute has argued[3] that most of the current excess inflation is attributable to higher corporate profits, an assessment that has been critiqued by the Reserve Bank[4] and Treasury[5].

Much of the overall increase in the profit share is attributable to the mining sector.

The profit share in mining is around the highest in at least two decades, due almost entirely to higher commodity prices since Russia invaded Ukraine.

In the rest of the economy, the profit share is not exceptional.

What does it mean for your mortgage?

Inflation appears to have peaked around the end of 2022, but the Reserve Bank is hyper-alert to any sign that inflation may not be declining towards its 2-3% target as rapidly as it would like.

Its most recent forecasts[6] published in May (which assumed no further increases in interest rates) envisaged inflation returning to 3% by mid-2025.

Governor Philip Lowe’s statement[7] following Tuesday’s board meeting suggests such a path is the slowest return to the bank’s target he will accept – the “narrow path[8]” he spoke about Wednesday morning.

Read more: The Lowe road – the RBA treads a 'narrow path'[9]

Lowe believes[10] the net impact of the budget, the main economic event last month, was to reduce inflationary pressures.

Despite this, his board lifted interest rates again[11] at its meeting this week.

The bank’s forecasts have annual economic growth slowing from 2.7% at the end of 2022 to 1.75% by mid-2023.

Today’s data is in line with that forecast, and so should not put any more pressure on the bank to increase interest rates further.

Its longer-term concern is labour productivity. Real GDP per hour worked has barely increased over the past few years. Lowe says this makes wage increases more likely[12] to add to inflation and reduces the leeway he has to hold off on pushing up rates.

References

  1. ^ 0.2% (www.abs.gov.au)
  2. ^ points out (www.abc.net.au)
  3. ^ argued (australiainstitute.org.au)
  4. ^ Reserve Bank (www.rba.gov.au)
  5. ^ Treasury (parlinfo.aph.gov.au)
  6. ^ most recent forecasts (www.rba.gov.au)
  7. ^ statement (www.rba.gov.au)
  8. ^ narrow path (www.rba.gov.au)
  9. ^ The Lowe road – the RBA treads a 'narrow path' (theconversation.com)
  10. ^ believes (parlinfo.aph.gov.au)
  11. ^ lifted interest rates again (www.rba.gov.au)
  12. ^ more likely (parlinfo.aph.gov.au)

Read more https://theconversation.com/going-down-the-6-graphs-that-show-australias-economic-growth-shrinking-206068

The Times Features

Why a Garage Shed is the Perfect Addition to Your Property

The most straightforward and most wholesome extension for any property. A garage shed is a potential solution for you, whether you are looking for an additional space for storage...

Revitalising Homes Through Strategic Architectural Renewal

Residential window replacement is one of the few home improvement interventions that goes far beyond simple aesthetic upgrades. Door frames and windows constitute these vital archi...

The Benefits of Animal-Assisted Speech Therapy For Children

Speech therapy has long been a standard for supporting children’s communication and emotional development. But what happens when you introduce a furry friend into the process? Th...

The Hidden Dangers of Blocked Drains and the Ultimate Solution for a Hassle-Free Home

Drain blockages are a big hassle to every homeowner and business owner alike. Whether it is a sink in the kitchen or bathroom, a clogged toilet, or a foul smell circulating aroun...

Understanding the Dangers of Ignoring a Gas Leak

Gas leaks are silent threats lurking within both homes and workplaces. A gas leak occurs when natural gas or any other gaseous substance escapes from a pipeline or containment. T...

Can You Sell Your House Privately in Queensland? Here’s How

Selling a house privately in Queensland is entirely possible and can be a cost-effective alternative to using a real estate agent. While agents provide valuable expertise, their co...

Times Magazine

CWU Assistive Tech Hub is Changing Lives: Win a Free Rollator Walker This Easter!

🌟 Mobility. Independence. Community. All in One. This Easter, the CWU Assistive Tech Hub is pleased to support the Banyule community by giving away a rollator walker. The giveaway will take place during the Macleod Village Easter Egg Hunt & Ma...

"Eternal Nurture" by Cara Barilla: A Timeless Collection of Wisdom and Healing

Renowned Sydney-born author and educator Cara Barilla has released her latest book, Eternal Nurture, a profound collection of inspirational quotes designed to support mindfulness, emotional healing, and personal growth. With a deep commitment to ...

How AI-Driven SEO Enhancements Can Improve Headless CMS Content Visibility

Whereas SEO (search engine optimization) is critical in the digital landscape for making connections to content, much of it is still done manually keyword research, metatags, final tweaks at publication requiring a human element that takes extensiv...

Crypto Expert John Fenga Reveals How Blockchain is Revolutionising Charity

One of the most persistent challenges in the charity sector is trust. Donors often wonder whether their contributions are being used effectively or if overhead costs consume a significant portion. Traditional fundraising methods can be opaque, with...

Navigating Parenting Arrangements in Australia: A Legal Guide for Parents

Understanding Parenting Arrangements in Australia. Child custody disputes are often one of the most emotionally charged aspects of separation or divorce. Parents naturally want what is best for their children, but the legal process of determining ...

Blocky Adventures: A Minecraft Movie Celebration for Your Wrist

The Minecraft movie is almost here—and it’s time to get excited! With the film set to hit theaters on April 4, 2025, fans have a brand-new reason to celebrate. To honor the upcoming blockbuster, watchfaces.co has released a special Minecraft-inspir...

LayBy Shopping