Economy rebounded from Delta shutdowns | Liverpool City Champion
Australia’s economy rebounded from the impact of last year’s delta closures, driven by a surge in household consumption.
National accounts for the December quarter released on Wednesday showed the economy grew 3.4%, rebounding from a 1.9% contraction in the September quarter.
Annual growth was 4.2%.
“Domestic demand has been driving growth this quarter, with high levels of household spending, particularly in states that have emerged from COVID-19 shutdowns,” said the Australian Bureau of Statistics’ acting national accounts manager. , Sean Crick.
Household spending in New South Wales, Victoria and the ACT rose 9.6%, while the rest of Australia rose 1.6%.
“How households react to rising inflation and interest rates will be critical to the consumer’s role as an economic driver,” said EY chief economist Jo Masters.
“A strong labor market and high job security should provide some confidence in some of the other factors that consumers are concerned about.”
Higher household consumption spending was partly offset by a 1.4% decline in business investment, which was hit by shortages of labor and building materials.
Housing investment fell 2.2% despite high levels of building approvals in recent quarters.
Net international trade detracted from growth by 0.2 percentage points, as exports of mining products and travel services fell, partially offset by increases in exports of rural goods.
Reserve Bank of Australia Governor Philip Lowe said the economy had subsequently proved resilient to the Omicron variant, but warned the war in Ukraine was a major new source of uncertainty .
After leaving the cash rate unchanged at a record 0.1% at Tuesday’s monthly board meeting, Dr Lowe said there were uncertainties about whether the rally would persist. inflation, given recent developments in global energy markets and ongoing supply-side issues. .
Economists expect the RBA to raise the cash rate later this year, but the timing of the first move is finely balanced.
The RBA expects the unemployment rate to fall below 4% by the end of the year, while core inflation is expected to rise above the target range of 2-3% and remain elevated.
“The potent mix means the RBA will eventually have to raise rates to dampen inflation,” said St George’s chief economist Besa Deda.
“But at the same time, the RBA wants to keep rates low for as long as possible to support the recovery from the pandemic.”
She said the risks from the war in Ukraine are higher inflation and possibly lower global growth, depending on how events play out.
Pressures on the cost of living are already being felt across the country, with record gasoline prices eating away at household budgets.
National Australia Bank’s latest wellbeing survey shows one in five Australians have missed a bill or loan payment in the last three months, while 75 per cent try to save but are dealing with debt repayment, bills and day-to-day expenses.
More than 40% of adults reported a drop in their savings in the past three months.
Australian Associated Press