Australia: Modest increase in Q1 GDP - ANZ

Felicity Emmett, senior economist at ANZ, notes that the Australian GDP rose a modest 0.4% q/q in Q1, following 0.3% and 0.2% rises in Q3 and Q4 respectively last year.

Key Quotes

“At just 1.8%, annual growth is down from 2.3% in Q4 and too low for comfort. The result looks to be less than the average 0.6-0.7% q/q growth the RBA had expected for Q1 and Q2, and suggests that another round of growth downgrades are likely in the Bank’s August Statement on Monetary Policy.”

“The report shows that weakness in the economy has become more broad-based, and the supports to growth more narrow.”

“The household sector remains under pressure, with weak income growth and falling house prices weighing on both consumer spending (+0.3% q/q) and housing construction (-2.5% q/q). Interestingly, household consumption growth was strongest in NSW and Victoria where house price declines have been the largest, suggesting that income growth is the main driver of weakness.”