Australia: Economy slows in Q2
September 3, 2014
In the second quarter, GDP grew a seasonally-adjusted 0.5% over the previous quarter, which was down from the 1.1% expansion in Q1 and marked the slowest growth in five quarters. Nonetheless, the print just exceeded market expectations of a 0.4% increase. On an annual basis, GDP grew 3.1% which marked a slowdown compared to the 3.4% expansion recorded in Q1.
In Q2, domestic demand’s contribution to the quarterly reading was unchanged from Q1’s plus 0.4 percentage points. Government consumption inched down to a 0.3% increase (Q1: +0.5% quarter-on-quarter), while consumption grew 0.5% which mirrored Q1’s result. Fixed investment growth increased slightly to 0.3% (Q1: +0.2% qoq). That said, inventories added 1.0 percentage points to overall economic growth in Q2, the highest amount in over ten years, after having shaved off 0.5 percentage points in Q1.
On the external front, exports swung from a 4.2% increase in Q1 to a 0.9% contraction in Q2. In contrast, imports rebounded from a 1.2% decrease in Q1 to a 3.7% expansion. As a result, the external sector’s net contribution to overall growth deteriorated from plus 1.2 percentage points in Q1 to minus 0.9 percentage points in Q2, which was the lowest reading since Q1 2012.