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Analysts at Westpac note that the Australian economy’s output grew by only 0.2% in the December quarter, following a similarly sluggish result in the September quarter, with output up by 0.3%.

Key Quotes

“Domestic demand grew by 0.3% in the quarter, inventories added almost 0.2ppts and net exports subtracted 0.2ppts (while the statistical discrepancy subtracted 0.1ppt).”

“Government spending, in the form of public demand, continues to expand at a brisk pace, up 6.2% over the year and directly adding 0.3ppts to activity in the final quarter of 2018.”

“This GDP print indicates that the Australian economy slowed in the second half of 2018 from around a 4% annualised pace in the first half to a 1% annualised pace in the second half.”

“The challenge for the Reserve Bank will be to credibly maintain its GDP growth forecasts at 3.0% in 2019 and 2.75% in 2020.”

“Expecting a lift in the growth momentum from 1% to 3% could only really be justified if the economy was expecting to benefit from a significant stimulus.”