National accounts: Australian economy expands by just 0.1 per cent.

Australian GDP growth came to a near standstill in the first three months of 2024 as tight household budgets, falling corporate profits and weakened terms of trade weighed on the economy.

In real terms, Australia’s gross domestic product grew by just 0.1 percent in the March quarter, slowing annual growth to 1.1 percent from 1.5 percent in December, the Australian Bureau of Statistics said on Wednesday.

The result is the weakest annual GDP growth outside the Covid-19 pandemic since the bursting of the dot-com bubble and the introduction of the GST in 2000.

In the three months to March, private household spending rose by only 0.4 percent as budgets were increasingly used for essential goods and services such as electricity, fuel and rent.

Falling export values, including those of key commodities such as iron ore and coal, coupled with rising imports of consumer goods such as medicines and clothing, also led to a significant deterioration in Australia’s terms of trade and further slowed growth.

GDP per capita, a measure of living standards, fell another 0.4 percent during the quarter, meaning population growth outpaced economic growth for the fourth quarter in a row.

Sean Langcake, head of macroeconomic forecasting at Oxford Economics Australia, said that despite “meager” GDP growth, there were “some signs of life” in household spending – thanks in part to Taylor Swift and Pink.

“Spending growth continues to focus on essential components such as utilities and health,”

“But spending on non-public purposes also increased this quarter due to increased activity around major concerts and sporting events as well as increased travel.”

Private investment activity was disappointing and net exports “significantly slowed” growth.

But Mr Langcake said the worst may be over, although growth was likely to remain below trend for the rest of the year.

“We believe economic momentum has bottomed out and expect conditions to improve in the second half of the year as tax cuts boost consumer spending.”

There’s more to come.

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