GDP expected to slump: Economists

Ahead of the release of the Australian national accounts data by the Australian Bureau of Statistics (ABS), bank economists are anticipating yet another quarter of weak growth in Australia’s gross domestic product (GDP).

The December quarter 2023 GDP data returned just shy of the Reserve Bank of Australia’s (RBA) forecast at 0.2 per cent instead of 0.3 per cent, with an annual growth rate of 1.5 per cent since December 2022.

Judo Bank chief economic adviser Warren Hogan stated that Australia’s GDP is expected to be weak again during the March quarter of 2024, with expectations being centred on a 0.2 per cent increase and an annual rate of 1.2 per cent.

“The biggest part of the economy, consumption spending, is not growing, with all the growth coming from exports, business investment and government spending,” Hogan said.

“We have some important partial indicators released ahead of the GDP, including income, profits, and inventory data, which could change expectations.”

He further stated that weakness in the household sector is anticipated to continue dragging on GDP growth, despite the rise in real household incomes in 4Q23.

“This is the weakest annual growth (outside of the pandemic) in 20 years and primarily reflects that the most significant component of our economy, household consumption, is barely growing,” he said.

Senior economist at ANZ, Blair Chapman, said the major bank’s economics team has revised its final GDP growth forecast for this quarter down to 0.0 per cent quarter on quarter (down from 0.3 per cent), with balanced risks.

Champman said: “We estimate the RBA was expecting growth of around 1.3 per cent year-on-year and 0.3 per cent quarter-on-quarter in the most recent Statement on Monetary Policy, so the data [is] likely to be a little weaker than their expectations.

“Although economic activity may be weaker than the RBA expects, this may not necessarily be the case for labour market or inflation data.”

Pat Bustamante, senior economist at Westpac, said they expect “recent run of subpar growth in economic activity continued in the March quarter, driven by weak consumer spending.

“Hours worked look to have been about flat in the quarter, also pointing to soft growth in economic activity,” Bustamante said.

"We expect GDP expanded by 0.3 per cent in 1Q. This would see annual growth ease from 1.5 per cent to 1.3 per cent. These outcomes are well below annual population growth, which is around a brisk 2.5 per cent.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

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