Treasurer Scott Morrison may remain optimistic on the Australian economy. That is, after all, part of his job.
But the latest growth figures show a slowing economy. And one that’s barely outpacing its booming population growth.
The economy grew by just 0.4% in the December quarter after an upwardly revised 0.7% expansion in the previous quarter.
The annual growth rate eased to 2.4%, from 2.7% previously.
That compares to an estimated 1.6% increase in population in 2017, according to the Australian Bureau of Statistics (ABS). Leaving per capita growth at a measly 0.8%.
News for Victoria, ‘the engine room of the national economy’ was even bleaker. The state’s economy grew only 0.3% over the December quarter. Despite its population growing at a blistering 2.4% over the year.
Nonetheless, a marked rebound in household spending and a footy tournament have technically helped the Australian economy extend its record-breaking expansion.
However, weak exports during the final three months of 2017 proved a drag on economic growth, posting the worst quarterly outcome since September 2016.
But Morrison remains optimistic about the outlook and the result was on track with what he expected when he released his mid-year budget review in December.
‘Australians [are] backing themselves, getting jobs, spending more and investing more, particularly where it matters in our economy,’ Mr Morrison told reporters in Canberra on Wednesday.
Shadow treasurer Chris Bowen was not impressed with the result. Mr Bowen told AAP:
‘At a time when the global economy is as strong as it’s been since the global financial crisis, it makes this result here in Australia even more disappointing…
‘The government hasn’t had to deal with a global financial crisis, yet economic growth remains stuck below trend and low wages growth continues to be a concern.’
Household consumption increased by 1% in the quarter, double the pace of the previous three months.
Mr Morrison noted this was led by an increase in spending in hotels, cafes and restaurants, thanks to the Rugby League World Cup tournament.
However, net exports fell 0.4%, having previously been driven by a bumper crop, while also reflecting the final stages of motor vehicle industry close-down.
But Mr Morrison said a look at the overall indicators within the report showed a ‘soundness and a strength’ in the economy.
The annual growth result was slower than the 2.5% that had been forecast by the Reserve Bank.
Earlier, central bank governor Philip Lowe had warned the growth result might be easier than first thought because of exports, but it didn’t alter his expectation of a stronger economy in 2018 than in 2017.
‘The underlying drivers leading to stronger growth are still in play,’ he told The Australian Financial Review Business Summit in Sydney on Wednesday.
He said consumption and employment have picked up and investment is rising reasonably strongly. He stated:
‘With the economy moving in the right direction, and interest rates still quite low, it is likely that the next move in interest rates in Australia will be up, not down’.
However, Dr Lowe does not expect a near-term adjustment with progress in reducing unemployment and having inflation return to target likely to be gradual.
The Australian Tribune with AAP