Since the “recession we had to have” as the recession of 1990/91 became known, Australia’s GDP growth has been consistently positive, with only the odd negative quarter here and there. Even during, and immediately after, the GFC, Australia managed to avoid two consecutive quarters of negative growth. However, recent forward-looking indicators have more than a few economists concerned and expectations of official rate cuts have hardened substantially.
The latest figures released by the ABS indicate March quarter GDP grew by 0.4%, in line with the market consensus figure but higher than the December quarter figure of 0.2%. On an annual basis, GDP increased by 1.8%, down from the December quarter’s comparable figure of 2.4%.
UBS economist George Tharenou said, “A significant policy shift supports sentiment and materially reduces the downside risk for housing and the economy. But this week’s slump in Q1 GDP…reiterates our view the starting point keeps getting materially worse.”