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Felicity Emmett, senior economist at ANZ, notes that the Australian GDP rose a modest 0.2% q/q in Q4, following a rise of 0.3% in Q3.

Key Quotes

“Annual growth edged down to 2.3% from a downwardly revised 2.7% in Q3 (previously 2.8%). The result is significantly weaker than the RBA’s forecast of 2.8% y/y published in the February Statement on Monetary Policy.”

“Growth is clearly being held down by a weak household sector. Housing construction fell 3.4% q/q, while household consumption was up just 0.4% q/q. Interestingly, household consumption growth was weakest in NSW, where spending grew just 0.1% in the quarter, providing some evidence of a wealth effect.”

“In contrast, the business, public and export sectors look solid. Non-mining investment rose a strong 2.4% q/q and expectations remain for further solid growth. Public spending rose 1.5% q/q and is likely to continue to contribute to growth given a large pipeline of state-backed infrastructure spending and the rollout of the National Disability Insurance Scheme. Exports were weak in Q4, but were held down by a sharp fall in gold exports, which we expect to be reversed in Q1.”