Australia’s gross domestic product year-to-date has slowed to 2.8%, well short of the 3.5% figure forecast by the Reserve Bank for 2018.
It has been something of a horror end to the economic year for Australia with the share market plunging in line with a crunching Wall Street and our growth figures coming in well under expectations at just 0.3 per cent in the September quarter.
Annualised the September quarter figure suggests economic growth of just 1.2 per cent, which in the Australian context is perilously close to recession levels.
Not that many young people even know what a recession is, given Australia’s record 26 years of uninterrupted economic growth.
Trend not positive
Given that quarterly figures can be misleading, the figures look a bit better if you look at the year to the September quarter which was 2.8 per cent.
However, the trend is not great – if you combine the June and September figures together that rate falls to 2.4 per cent, which is OK but still well short of the Reserve Bank’s forecast of 3.5 per cent for the current calendar year and even the milder forecast of 3.25 per cent for 2019.
While it is always dangerous putting too much emphasis on a single quarter’s growth numbers, it is still difficult to look around and spot too many economic stimulus measures on the horizon.
Employment remains crucial
Employment will be crucial and is still holding up at this stage but at the household level things continue to look fairly bleak, despite a reasonable 0.3 per cent rise in retail sales in October.
The Federal Government (and the broader Liberal Party) seems to be more focussed on patching up its internal cohesion than any form of economic leadership and the four big banks are still caught in the headlight glare of the Royal Commission and seem to have significantly tightened up loan access for businesses small and large and also property investors.
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This article is from Small Caps
By John Beveridge
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