Australia: Economy decelerates in Q2 to an over-four-year low
September 3, 2015
In the second quarter, GDP grew a seasonally-adjusted 0.2% over the previous quarter, which was below the 0.9% expansion tallied in Q1 and the 0.4% expansion analysts had expected. The result marked the lowest growth rate in over four years. On an annual basis, GDP growth deteriorated, falling from a revised 2.5% expansion in Q1 2015 (previously reported: +2.3% year-on-year), to a 2.0% increase in Q2.
A negative contribution from the external sector was the driving factor behind Q2’s deceleration. On the domestic front, demand increased from a 0.3% increase in Q1 to a 0.8% rise in Q2 over the previous quarter. The acceleration was mainly due to a sharp increase in government consumption, from 0.6% in Q1 to 2.3% in Q2, the highest reading since Q3 2008. Private consumption, on the other hand, moderated from a 0.7% increase in Q1 to a 0.5% increase in Q2. Fixed investment rebounded to a 0.4% increase, up from a 0.7% contraction in Q1.
On the external front, export growth observed a drastic downturn, falling from a 3.7% expansion in Q1 to a 3.3% contraction in Q2, which marked the worst result since Q1 2011. Imports also decreased 0.7% in Q2, contrasting an increase of 3.2% in Q1. The resulting contribution of the external sector was minus 0.6 percentage points, the lowest contribution in a year (Q1: +0.2 percentage points).
Author: Robert Hill, Economist