Westpac analysts point out that the Australian economy lost considerable momentum in 2018, slowing from around a 4% annualised pace in the first half of the year to around a 1% pace in the second and the sluggish conditions have extended into early 2019.
Key Quotes
“Output grew by a modest 0.4% in the March quarter and annual growth slowed to 1.8%, the softest result since the time of the GFC (September 2009). At 1.8%, annual growth is a full percentage point below ‘trend’, judged to be 2.75%. Per capita GDP grew by only 0.1% over the past year.”
“The March quarter outcome was a downside surprise and the detail was soft. The key surprises were: (1) consumer spending disappointed, 0.3% vs a f/c 0.4%; (2) ownership transfer costs (relating to real estate turnover) fell very sharply, -13%; and (3) inventories were a negative, -0.1ppt vs a f/c flat ~ with a larger drag from ‘other’ inventories.”
“Monetary and fiscal policy are both set to become more expansionary (via rate cuts and tax cuts), cushioning the economy and potentially leading to a modest lift in growth in 2020 – but with the risk that output growth remains below trend.”
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