Soft economic growth expected in key data drop
Andrew Brown |
Australia’s economy is expected to have limped along for the second quarter of the year, with weak growth on the cards.
Economists are tipping only modest growth for the national accounts when June quarter GDP data is released on Wednesday.
In the lead up to the figures, the Commonwealth Bank revised down its GDP estimate to 0.1 per cent for the period, because of softer public demand.
“The key drivers of softer growth in the quarter were a pull back in data centre investment in the quarter, weaker than expected public demand and weak travel imports as more Australians stayed home than travelled offshore,” the bank’s head of Australian economics Belinda Allen said.
And despite softer growth, inflation had not slowed, Ms Allen said.
“Rolling supply shocks, more Australians spending money domestically than offshore and weaker productivity growth are acting to keep inflation high and the RBA has more work to do,” she said.
NAB said it still expected GDP to grow by 0.2 per cent, alongside an increase of 1.8 per cent year-on-year.
“Domestic final demand will be supported by resilient consumption growth, higher residential building growth and ongoing growth in public demand,” senior economist Jessie Cameron said.
“Confirmation of the recent pulse in consumption growth is slowing sufficiently to be comfortable on the inflation outlook.”
Lead economist for Oxford Economics Australia Ben Udy said net trade barely rose in the second quarter, setting up small growth numbers.
He said high fuel costs and limited flight availability also impacted the economy.
“The current account deficit widened a little last quarter as the conflict in the Middle East pushed up the price of oil and the cost of imports for Australia,” he said.
“Solid commodity prices also benefited Australian exporters, with coal and lithium leading the way, but on net the balance of goods trade still declined and the terms of trade fell 1.6 per cent.”
AAP