[1/2]Office workers cross a street in Sydney, Australia, September 4, 2017. Picture taken September 4, 2017. REUTERS/Steven Saphore/File Photo
SYDNEY, June 7 (Reuters) - Australia's economy grew at the weakest pace in 1-1/2 years last quarter as high prices and rising interest rates sapped consumer spending, while emerging signs pointed to further softness ahead amid elevated borrowing costs and a slowdown in global growth.
Data from the Australian Bureau of Statistics on Wednesday showed real gross domestic product (GDP) rose 0.2% in the first quarter, easing from 0.5% in the previous quarter and under forecasts of 0.3%.
Annual growth came in at 2.3%, also missing forecasts for 2.4% expansion.
The report contained initial signs that domestic price pressures are easing and evidence that households are saving less to meet high costs of livings and rising mortgage rates.
Domestic price growth slowed to 1.1%, after a 1.4% rise in the December quarter, and household savings as a share of income shrank to 3.7%, the lowest level since 2008, with consumers cutting back on discretionary spending such as household equipment and vehicles.
Household consumption rose only a meagre 0.2% in the March quarter, contributing 0.1% percentage points to GDP, mostly from spending on essential goods and services.
Price pressures have prompted the Reserve Bank of Australia (RBA) to raise its cash rate by 400 basis points since last May, taking it to an 11-year high of 4.1% and flagging more tightening may still be required.
Markets have priced in a 60% chance of another hike in July.
Compensation of employees (COE), the broadest measure of economy-wide labour costs, increased 2.4% in the first quarter from the December quarter when it rose 2.0%, a result that would worry policymakers.
RBA Governor Philip Lowe has highlighted that fast increasing unit labour costs are a risk to the central bank's inflation outlook, if productivity failed to pick up from the current flat levels.
Reporting by Stella QiuEditing by Shri Navaratnam
Our Standards: The Thomson Reuters Trust Principles.
FAQs
What was Australia's q1 GDP growth? ›
Australia's economy expands 2.3% in the first quarter, slowest growth in 1½ years. Economists polled by Reuters had forecast an expansion of 2.4%, compared to the 2.7% expansion in the fourth quarter of 2022. On a quarter-on-quarter basis, GDP grew by 0.2%, compared to the 0.3% expected in the Reuters poll.
Why is Australian economy struggling? ›SYDNEY, June 7 (Reuters) - Australia's economy grew at the weakest pace in 1-1/2 years last quarter as high prices and rising interest rates sapped consumer spending, while emerging signs pointed to further softness ahead amid elevated borrowing costs and a slowdown in global growth.
What is Australia's GDP growth rate now? ›Australian economy grew 0.2% in the March quarter 2023
Gross Domestic Product (GDP) rose 0.2%, the weakest result since the COVID-19 Delta lock-down contraction in September 2021.
The world's 12th largest economy
Strong growth in 2021 solidified Australia's position as the world's 12th largest economy in 2021. Nominal GDP was around A$2.2 trillion (US$1.6 trillion) in 2021. Australia is home to just 0.3% of the world's population, but accounts for 1.7% of the global economy.
The Canadian economy grew at an annualized rate of 3.1 per cent in the first quarter of 2023, Statistics Canada reported Wednesday. The latest data shows growth beat out the federal agency's own forecast of 2.5 per cent for the quarter.
What is the GDP growth rate in Q1 2023? ›Real gross domestic product (GDP) increased at an annual rate of 2.4 percent in the second quarter of 2023, according to the "advance" estimate. In the first quarter, real GDP increased 2.0 percent.
What are the challenges faced by Australia? ›Over the last two and a half years, the Australian economy has been struck by a continuous set of external economic shocks. The COVID pandemic and public health measures to curb it. Disruptions to global supply chains. The closure of our borders and collapse of migration.
Why is Australia's economic growth slowing? ›Growth in Australian economic activity is expected to have slowed in the March quarter and is forecast to remain subdued through this year as higher interest rates, the higher cost of living and earlier declines in household wealth continue to weigh on growth.
Is Australia heading for economic crisis? ›Australia is moving closer towards a recession and its chances of experiencing one in the next year is sitting at around 50 per cent, according to economists.
How is the economy in Australia now? ›The Australian Economy - September quarter 2022. Our economy grew 0.6 per cent during the September quarter 2022, and 5.9 per cent compared to last year. This was the fourth consecutive quarter of growth since the COVID-19 Delta variant lockdowns. Household consumption drove the increase, growing 1.1 per cent.
Why is GDP in Australia so high? ›
Mining has contributed to Australia's high level of economic growth, from the gold rush in the 1840s to the present day.
How has Australia's GDP changed? ›Australia gdp growth rate for 2021 was 2.24%, a 2.29% increase from 2020. Australia gdp growth rate for 2020 was -0.05%, a 2.22% decline from 2019. Australia gdp growth rate for 2019 was 2.17%, a 0.71% decline from 2018. Australia gdp growth rate for 2018 was 2.88%, a 0.6% increase from 2017.
Which economy is stronger Australia or Canada? ›Australia just falls outside of the G8, as it has the twelfth largest economy in the world. It has Gross Domestic Product or GDP ranks it eighteenth in the world its total wealth stands at 6.4 trillion dollars. Canada is ranked at thirteenth in the world in terms of GDP and has a total wealth of 6 trillion dollars.
What is Australia's weaknesses? ›- Exposed to commodity price volatility (specifically iron ore, coal and LNG)
- Economy remains dependent on Chinese demand.
- Substantial household debt (192% of gross disposable income)
- Shortage of infrastructure due to the country's vast territory.
- Vulnerable to climate change (bushfires and droughts)
The Australian financial system remains strong and well placed to support economic activity. Australian banks are well regulated, well capitalised, profitable and highly liquid; they are in a strong position to continue lending to domestic households and businesses.
What is Australia's quarterly nominal GDP? ›Australia Nominal GDP reached 440.1 USD bn in Mar 2023, compared with 413.9 USD bn in the previous quarter. Nominal GDP in Australia is updated quarterly, available from Sep 1959 to Mar 2023, with an average number of 79.0 USD bn.
How much did GDP growth last quarter? ›Basic Info. US Real GDP QoQ is at 2.40%, compared to 2.00% last quarter and -0.60% last year. This is lower than the long term average of 3.18%.
What was the GDP in q1 2008? ›In the first quarter, covering January to March, the economy contracted by 1.6%, and real GDP was $15.7 trillion.
What was the q1 GDP in 2011? ›Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011 (that is, from the fourth quarter to the first quarter) according to the "advance" estimate released by the Bureau of ...