Australia GDP Q3 2021


Australia: Economic growth slows less than expected in the third quarter

December 3, 2021

Economic activity dropped 1.9% on a seasonally-adjusted quarter-on-quarter basis in Q3, contrasting the previous quarter's 0.7% expansion. Q3's reading came amid the reinstatement of lockdowns to contain the Delta variant of Covid-19. That said, it beat market analysts’ expectations of a sharper 2.7% plunge.

Household spending sank 4.8% in seasonally-adjusted quarter-on-quarter terms in Q3, contrasting the 1.0% expansion logged in Q2. In addition, fixed investment growth waned to 0.2% in Q3 from 3.2% in the previous quarter. More positively, government consumption growth picked up to 3.6% in Q3 (Q2: +1.3% s.a. qoq).

On the external front, exports of goods and services bounced back, growing 1.2% in the third quarter (Q2: -3.4% s.a. qoq), while imports of goods and services fell 4.0% in Q3 (Q2: +1.1% s.a. qoq).

Meanwhile, in annual terms, GDP growth slowed markedly to 3.9% in the third quarter, from 9.5% in the second quarter.

Commenting on Q3’s performance and the growth outlook, Lee Sue Ann, economist at United Overseas Bank, said:

“The latest GDP numbers were much better than expected, placing the economy in a better position for a recovery ahead. As this juncture, we look for a rebound in Q4 2021 as major states proceed with reopening plans, which will allow economic activity to recover. We expect Q4 2021 growth of around 1.5% yoy (+1.8% qoq), which will see full-year GDP for 2021 at 4.0%. However, the emergence of the new Covid-19 Omicron variant could potentially start taking a toll on the global outlook. This will not only pose a risk to the economic outlook for 2022, and also a need for patience on policy normalisation.”

Consensus Forecast panelists see the economy growing 3.5% in 2022, which is up 0.2 percentage points from last month’s forecast, and growing 2.9% in 2023.

Author: Massimo Bassetti, Senior Economist

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