The September quarter national accounts, released yesterday, showed Australian economic growth slowed to 1.8 per cent on an annual basis.
The 0.5 per cent contraction in the September quarter was below economist estimates of -0.1 per cent, making it the worst result since the depths of the global financial crisis.
Private investment in new buildings detracted 0.3 percentage points from GDP growth; engineering detracted 0.2 percentage points; and new and used dwellings detracted 0.1 percentage points.
Public capital expenditure detracted 0.5 percentage points from growth as it declined from elevated levels in the June quarter, and net exports detracted 0.2 percentage points.
Industry Super Australia chief economist Stephen Anthony put the fall in the national accounts down to the lack of public infrastructure investment by State governments.
Mr Anthony said the lack of nation-building projects means “the writing has been on the wall for some time now”.
“We are entering the post-boom dog days that Ross Garnaut warned about,” Mr Anthony said.
But AMP Capital economist Diana Mousina said a technical recession (ie, two quarters of negative GDP growth) is unlikely.
“We expect GDP growth to lift back to around a 2.5 per cent pace in the current quarter and through 2017,” she said.
However, growth will continue to be “fragile and constrained”, Ms Mousina said.
“In an ideal world, now would be a time for some fiscal stimulus focused on infrastructure spending,” she said.
“But with public debt well up from pre-GFC levels and the government focused on reducing the budget deficit and the task of maintaining Australia’s AAA credit rating, this looks unlikely.”
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