Australia: Economic activity accelerates in Q4; posts strong growth in full year 2014
March 3, 2015
In the fourth quarter, GDP grew a seasonally-adjusted 0.6% over the previous quarter, which was just above the 0.4% expansion tallied in Q3. The result marked the highest rate of growth in three quarters and was in line with market expectations. On an annual basis, GDP expanded 2.5%, which represented a slight deceleration compared to the 2.7% recorded in Q3.
Q4’s quarterly result was mainly driven by a solid rebound in domestic demand, which swung from a 0.4% contraction in Q3 to a 0.7% expansion in Q4. Increased private consumption and a strong pick up in investment more than offset a deceleration in government spending. Private consumption grew 0.9% in Q4, which was up from the 0.6% rise recorded in the previous quarter and marked the highest growth rate since Q1 2012. Investment swung from a 3.3% drop to a moderate 0.3% increase in Q4, whereas growth in government consumption slowed to 0.4% in the final quarter of last year (Q3: +1.0 quarter-on-quarter).
On the external front, export growth declined from 3.7% in Q3 to 1.0% in Q4. Meanwhile, imports dropped 2.5%, which was a more pronounced contraction than the 0.7% decrease tallied in the previous quarter. Since exports fell slightly faster than imports, the external sector’s net contribution to overall growth declined from plus 0.9 percentage points in Q3 to plus 0.7 percentage points in Q4.
In the full year 2014, GDP expanded a solid 2.8%, which represented an acceleration over the 2.1% recorded in 2013.
Author: Cecilia Simkievich, Economist