According to the latest data from the Australian Bureau of Statistics (ABS), the Australian economy slowed down in the March quarter. The country’s gross domestic product (GDP) grew at a quarterly rate of only 0.2 percent in the first three months of this year, and at an annual rate compared to March last year of 2.3 percent.
This is the slowest quarterly pace of GDP growth since the economic downturn recorded in the September quarter of 2021, during the widespread lockdowns due to covid.
“Higher interest rates and increased cost-of-living pressures are affecting household budgets while slowing our economy,” Federal Treasurer Jim Chalmers said on Wednesday, adding that these numbers were not surprising, and were in line with the government’s expectations for moderate growth in Australia. economy.
While the rise in interest rates is clearly eroding household budgets, salaries and wages increased by 2.4 percent in this quarter, or 10.8 percent during the year, which is the fastest growth in almost 16 years, Chalmers emphasized.
The Treasurer declined to make any predictions about whether data for the June quarter would show a slowdown in Australia’s economy. It should also be borne in mind that half of the GDP growth in March comes from the consumption of households, which are increasingly financed from their own savings.
– Spending on basic goods and services is the main contributor to the growth of household consumption, while categories such as furniture and household equipment, vehicle purchases and other goods and services reduced this growth – explained Catherine Keenan, ABS head of national accounts.
Total household incomes increased by 1.7 percent, as wages also increased, but total liabilities also went up by 4.4 percent, primarily due to higher monthly loan repayments and rising living costs.
In order to finance this gap, citizens had to reach for savings, which is why the ratio of savings to household income decreased to 3.7 percent, which is the lowest level since the June quarter of 2008, ABS announced.
In addition, Westpac Bank economists warned that the savings ratio is now below six percent of the so-called equilibrium level for the second quarter in a row.
– The period of “excess savings”, which was characteristic during the pandemic, is over – pointed out the economists.
When it comes to consumption, electricity, gas and motor fuels led the way, increasing by 5.2 percent in this quarter. Spending on food went up by 0.4 percent.
– The growth of rents and other housing costs, as well as insurance and other financial services by 0.5 percent, are the factors that contributed the most to total expenditures in this quarter – emphasized ABS.
The weak growth of the Australian economy was also influenced by the growth of imports of 3.2 percent, which exceeded the expansion of exports of 1.8 percent. All this resulted in a drop in net exports, which reduced quarterly GDP growth by 0.2 percent.
Lower investments in houses
Purchases of newly built or existing real estate fell in the March quarter of 2023 by 1.3 percent, as well as expenditures on renovations and additions by 0.9 percent. This indicates that the constant rise in interest rates is slowing down housing spending.
Private and public sector recovery
Private and public sector spending recovered from the decline in the December quarter. The so-called private gross investments in fixed assets, which include new plants and equipment, increased by 1.4 percent, while in the December quarter they recorded a decrease of 0.9 percent.
State spending on capital projects increased by three percent, while in the December quarter it recorded a decrease of 1.2 percent. Within that amount, state and local governments increased spending by 3.9 percent, while non-financial government agencies increased spending on transportation infrastructure and health by 4.1 percent, ABS said.
Exports recorded growth for the fourth quarter in a row, with exports of services growing by 7.7 percent, including a 17.5 percent jump in tourism services. According to Catherine Keenan from ABS, the export of tourist services was at about 70 percent of the former amount before the pandemic.
At the same time, spending on trips abroad increased by 7.1 percent, which contributed to the overall increase in the import of services by 3.1 percent.
Source: Vesti online by www.vesti-online.com.
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