Australia’s GDP increased by 0.9 per cent during the June quarter, pushing the annual growth rate to 3.6 per cent, according to the June quarter National Accounts released on Wednesday.
The Australian Bureau of Statistics (ABS) reported that higher levels of household spending and exports were the main drivers of growth during the last quarter.
“This is the third consecutive quarter of economic growth, following a contraction in the September quarter 2021, which was impacted by the Delta outbreak,” said ABS head of National Accounts, Sean Crick.
Household spending rose by 2.2 per cent over the quarter and contributed 1.1 percentage points to GDP, driven by higher spending on travel as well as hotels, cafes and restaurants.
“Households increased spending on domestic and international travel as COVID restrictions further eased and international borders remained open,” said Mr Crick.
Net trade contributed 1.0 percentage points on the back of a 5.5 per cent increase in exports while being partially offset by a 0.7 per cent lift in imports.
“Exports recorded the strongest quarterly rise since the Sydney Olympics boosted travel exports in September quarter 2000,” Mr Crick noted.
Treasurer Jim Chalmers said that the National Accounts figures depicted an economic rebound that has been held back by capacity constraints, skills shortages and falling real wages.
“While the headline figures are encouraging, the details confirm the pressures that are being felt by Australian households and that are weighing on our supply chains,” he said.
“In the two months since the end of the June quarter, we’ve seen a deteriorating global growth outlook, continuing labour shortages, and rising interest rates which are straining businesses and households and creating headwinds for our economy over the year ahead.”
Dwelling investment was down 2.9 per cent for the quarter, detracting 0.1 percentage points from GDP, with construction activity taking a hit due to ongoing material and labour shortages along with the impacts of wet weather along the east coast.
Pockets of weakness ahead
Commenting on the GDP figures, VanEck head of investments and capital markets, Russel Chesler, said that despite the economy’s apparent robustness, pockets of weakness are now expected to develop.
“While the local economy is performing well now by global standards, growth could moderate in early 2023 as commodity prices could fall in response to slowing global economic growth as higher credit costs weigh on economic activity,” he said.
“The domestic economy remains vulnerable to global influences such as rising energy and food prices, and a slowdown in the world’s largest economy, the US. Chinese growth too is slowing with ongoing shutdowns and the nation’s COVID-Zero policy is impeding demand and causing ongoing supply chains bottlenecks.”
According to VanEck, the combination of headwinds could lead to a slowing of economic activity that could see Australia’s GDP growth fall below 3 per cent.
“Some households will come under pressure, particularly those who bought highly priced property at the height of the boom and borrowed to capacity,” said Mr Chesler.
“Those Australians could find themselves in trouble as interest costs mount, which could lead to a rising number of distressed property sales and mortgage defaults across the nation.”
Meanwhile, the Treasurer said that the federal government’s upcoming budget will seek to increase the resilience of the local economy.
“Our economic plan is focused on steering the economy through these difficult economic circumstances, by delivering responsible cost-of-living relief and building a stronger, more resilient economy,” said Dr Chalmers.
“We are working hard to deliver on our commitments to boost the capacity of our economy through more investments in skills and education, cleaner and cheaper energy, and advanced manufacturing and to ease cost-of-living pressures through cheaper childcare and medicines.
