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%.
“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.”