7 March 2019
Bob Cunneen, Senior Economist and Portfolio Specialist
Australia’s economic growth – real GDP vs real GDP per capita
Source: Australian Bureau of Statistics.
The Australian economy is back in the slow lane. Australia’s real economic growth was only 2.3% for the year to December 2018 (blue line). Consumer spending growth is also subdued at only 2% annual growth given the challenges of high debts and falling house prices. Housing construction has hit the brakes as well with tighter lending standards, higher interest rates for investors and concerns over the perceived oversupply of apartments.
Australia’s growth performance is even more disappointing when adjusted for population growth. Australia’s Real Gross Domestic Product (GDP) per capita shows annual growth at only 0.7% (red line) which is the 2.3% real economic growth result less the 1.6 % annual population growth.
However Australia is not yet in the breakdown lane. Economic growth is still much healthier than the painful experience with the Global Financial Crisis from 2007-2009.
As the Reserve Bank of Australia (RBA) has recently noted, the Australian economy “is being supported by rising business investment, higher levels of spending on public infrastructure and increased employment.” Low interest rates, a weaker Australian dollar and the forthcoming income tax cuts should also help the economy regain speed. So while Australia’s growth is slow, essentially it’s too early to call for roadside assistance on the Australian economy.
1 ‘Media Release – Statement by Philip Lowe, Governor: Monetary Policy Decision’, rba.gov.au/media-releases/2019/mr-19-05.html, Number 2019-05, 5 March 2019.
This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.
Powered by WPeMatico