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NAB analysts note that the Australian GDP recorded another quarter of weak growth, lifting a modest 0.2% q/q in 4Q and resulting in through the year growth of 2.3% in 2018.

Key Quotes

“It is clear that growth in H2 2018 slowed significantly from the pace seen in H1 2018 – growth annualised at only 0.9% in H2 2018. Even with faster momentum through 2019, growth is unlikely to reach the 3.0% rate expected by the RBA over 2019. NAB’s forecast is for the RBA to keep rates on hold for the foreseeable future, though we have signalled increased risk of a rate cut.”

“Any significant deterioration in the labour market would likely see a series of cuts by the RBA.”

“The soft results of recent quarters reflect a combination of the downturn in housing, continuing relatively slow income growth (though this has improved a little) and the tail end of the wind down in mining investment.”

“On the expenditure side, the weakness in the quarter was largely a result of soft consumption growth, a sizable fall in dwelling investment and weaker-than-expected growth in business investment. Growth was supported by a solid contribution from underlying public demand, driven by ongoing growth in government consumption – likely NDIS related; government investment fell in the quarter.”