ABS’s snapshot of Australia’s accounts shows economic growth – albeit low – in the face ‘challenging international circumstances’
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The Australian Bureau of Statistics released its latest set of national accounts, which give us a snapshot of how the economy is performing in the quarter, and what’s happening under the hood.
Here are the three things you need to know.
Economic growth eased from 2.5% in the year to the March quarter, to 2.1% in the year to June, the Australian Bureau of Statistics figures showed, while real GDP in the three months to June expanded by 0.4%, a tick higher than in the previous quarter.
Growth is softening, but is not disastrously slow, and there’s no sign of the collapse that many feared when the US and Israel began their attacks on Iran at the end of February, triggering a global oil shock.
Jim Chalmers called it a “robust result in challenging international circumstances”.
“The Australian economy has obvious strengths, but we can still see in these numbers our three primary challenges: inflation, productivity and global volatility, and we know that each of these puts pressure on people,” the treasurer told reporters.
Economists predict the economy will continue to slow through 2026, moving towards 1.3-1.5% growth by the end of the year as the Reserve Bank’s interest rate hikes and the high cost of living drag on spending and activity.
Stephen Smith, a partner at Deloitte Access Economics, said “today’s accounts show too little growth and too much inflation”.
Just as the pandemic led to some big swings in behaviours and spending patterns, so has this year’s big shock – the Middle East conflict.
The national accounts showed disposable household incomes, after inflation, lifted by a respectable 0.6% in the quarter. That slipped to just 0.3% after adjusting for population growth, but it was at least positive.
Belinda Allen, CBA’s head of Australian economics, said this showed households were “largely insulated from the Middle East conflict over the quarter” and there was “only partial pass through of interest rate hikes to date”.
What we didn’t do was fly north for the winter. War in the Middle East put the dampers on international travel, not least as high jet fuel costs pushed up the price of air fares.
Grace Kim, ABS’s head of national accounts, said “the number of Australians travelling overseas for the northern hemisphere summer fell for the first time since the Covid-19 pandemic”.
