The optimism that accompanied last week's surprisingly high Australian GDP figures may well be misplaced, warns AllianceBernstein.
Treasury's better-than-expected GDP figure of 3 per cent for the fourth quarter of 2015 has been taken as proof that things "aren't so bad", says AB senior economist, Asia Pacific, Guy Bruten.
"After all, Australia’s performance of 3 per cent year-on-year is close to the top of the table among Organisation for Economic Co-operation and Development [countries]," Mr Bruten said.
But once you scratch the surface, the story doesn't look quite so great, he cautioned.
While net exports made a healthy contribution to growth, the two other big contributors – public spending and inventories – tend to be "volatile" and are "unlikely to be repeated", Mr Bruten said.
"Meanwhile, private sector demand was almost flat over the year, rising just 0.3 per cent – the weakest reading since the global financial crisis," he said.
"Business capital spending continues to be a huge drag as the mining boom unwinds. The recent capital expenditure survey suggests that business investment will continue to decline, with another 30 per cent-plus slide in the mining sector in fiscal year 2017," Mr Bruten said.
Household spending has been strong enough to provide an offset for business capital spending, but that looks likely to end soon with construction activity set to "top out" shortly, he said.
"Consumption spending has held up despite record-low wages growth, but that is because of a large decline in the saving rate. That, to us, seems unsustainable," Mr Bruten said.
"To get a broader view of the Australian economy, it would be better to focus on measures such as net national disposable income per capita – essentially GDP adjusted for changes in the terms of trade and population growth. This continues to go backwards, recording a decline of 0.4 per cent in the quarter (down 2.4 per cent year on year).
"The bottom line here, in our view, is that a lot of the 'good news' in 2015 – from the jobs numbers to the GDP stats – are set to unwind as we head through the first half of 2016. Disappointment may well replace that surprising sense of relief," Mr Bruten said.
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