Australia: GDP growth slows in Q1
June 7, 2017
The Australian economy slowed down in Q1 2017, after having rebounded at the end of last year. In the first quarter, GDP expanded a seasonally-adjusted 0.3% over the previous quarter, down from the 1.1% expansion registered in Q4 2016. The result was nevertheless slightly above the 0.2% expansion analysts had expected. A year-on-year comparison showed GDP growth improving from 1.9% in Q3 to 2.4% in Q4.
The result was driven by slower private consumption growth. Household consumption expanded 0.5% in Q1 after having grown 1.0% in Q4. Household spending continues to suffer from slow wage growth, coupled with a slow pickup in inflation and increasing mortgage rates. Fixed investment suffered a contraction in Q1, in part due to base effects following Q4’s investment surge but also because of falling housing investment.
On the external front, exports contracted, falling 1.6% in Q1 and contrasting the 3.7% growth registered in Q4. The contraction is here again due to base effects following a surge late last year in LNG exports, which is being curtailed by a stronger dollar and government intervention. Imports slowed down marginally, reflecting the poor state of Australian domestic demand.
Author: Christopher Mc Innes, Economist