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The economy grew just 0.5% q/q in Q4, and annual growth of 2.2% remains soft. The details of the GDP report show persistent weakness in private sector demand, with the public and external sectors continuing to be the mainstays of growth, economists at ANZ Research brief.

Key quotes

“The 0.5% q/q rise in GDP was slightly down on the revised 0.6% gain in Q3 (initially +0.4%), but annual growth of just 2.2% suggests economic momentum is tepid.”

“The report shows the private sector economy is weak. Overall private sector demand rose just 0.1% in the quarter and is up just 0.1% over the past year. Falling housing construction (-3.4% q/q) and business investment (-1.7%) are the key drivers of this weakness, but very weak growth in consumer spending is also an important factor.”

“Exports are set to turn negative in Q1, as international tourism slumps, international students stay away and agricultural exports are hit.”

“The cloud is now over Q2 growth. The economic impact of the coronavirus broadening from the initial tourism impact to supply chain disruptions, extended weakness in Chinese demand and, most importantly, weaker domestic demand, the risk of a recession has increased sharply.”