Ahead of the release of the national accounts on Wednesday, the big four banks have issued their latest GDP forecasts, with growth of between 0.5 and 0.8 per cent anticipated in Q3.
If the actual quarterly GDP figure sits within this range, this would represent a slowdown in comparison to the 0.9 per cent growth seen during Q2 this year.
Out of the big four banks, Westpac has predicted the strongest growth of 0.8 per cent, but the bank’s senior economist Andrew Hanlan noted that the economy is now in a period of transition.
“While overall growth is likely to be relatively robust for the September quarter, a sharp slowdown is in prospect for 2023 as high inflation and rising interest rates impact,” he said.
“There is already some evidence of the adverse impacts of these powerful headwinds, notably weak retail sales.”
Westpac’s forecast would see the annual rate of GDP growth lift to 6.4 per cent, reflecting base effects from the economic weakness seen in Q3 2021 amid widespread lockdowns.
“Activity in the period will be supported by the tailwinds of earlier policy stimulus and the reopening effect from the delta lockdowns of 2021,” said Mr Hanlan.
“That said, the reopening effect is fading, having been most powerful over the first half of 2022, when consumer spending expanded at a 9 per cent annualised pace, led by services.”
The bank’s predictions include a 0.9 per cent lift in domestic demand and a net negative 0.1 percentage point (ppt) impact from net exports (-0.5 ppt) and inventories (0.4 ppt).
Meanwhile, the Commonwealth Bank (CBA) is expecting the weakest quarterly GDP growth among the big four banks at 0.5 per cent.
While not including an annual forecast, CBA senior economist Belinda Allen explained that the bank will finalise its GDP forecasts once partial data is released on Monday and Tuesday.
“Household consumption is expected to add to growth, with a larger contribution from non-retail trade expenditure, particularly services [spending] like recreation. Business investment should show a small contribution to growth, as will public demand,” she said.
CBA expects that net exports will detract from growth by 0.8 ppt. Likewise, economists at NAB have predicted that net exports will weigh heavily on the GDP print for the quarter.
“Goods consumption likely fell slightly (but remained high) while services consumption continued to recover at a slower pace,” NAB economists said in a recent note.
“The detraction from trade will likely be driven by a strong rise in imports, including a notable recovery in services imports, outpacing the rise in exports.”
NAB has forecast a 0.6 per cent increase in GDP in Q3, for a lift of 6.2 per cent year-on-year. Like Westpac, NAB warned that it is likely GDP growth will slow sharply moving forward as the impact of higher rates cools the economy and the pandemic rebound fades.
Finally, ANZ expects that the September quarter national accounts will show “ongoing solid growth” with GDP up 0.7 per cent for the quarter and 6.3 per cent for the year.
“Partial data released over the past week were a touch softer than our expectations, but once again the ‘top-down’ indicators point to a solid outcome,” the bank’s economists said.
“Household consumption is likely to have been the main area of strength, with private and public investment also posting solid gains. Net exports will make a large subtraction.”
The National Accounts will be released by the Australian Bureau of Statistics on Wednesday morning, just a day after the Reserve Bank hands down its final rate decision of the year.
