Australia’s economy (GDP) grew by 0.2% in the three months to June, according to the Australian Bureau of Statistics (ABS).
The ABS today released the latest gross domestic product (GDP) figures, showing the economy’s growth is slow.
Today’s figures are in line with Treasurer Jim Chalmers’s projections, who said earlier this week he anticipated “soft and subdued” growth.
Some economists say population growth and government spending have kept Australia out of a recession.
What is GDP?
GDP is the value of goods and services produced by a country over a period of time.
In this year’s Federal Budget, the Government predicted Australia’s GDP would grow by an annual rate of 1.75% in the 2023/24 financial year.
If a country’s GDP is negative for six months in a row, many economists say the economy is in a recession, or “shrinking”.
Today
Today’s results show the GDP rose by 0.2% in the three months to June 2024.
The annual GDP growth was 1%, down from the Government’s budget projection of 1.75%.
In a statement, the ABS’ head of national accounts Katherine Keenan said it was the lowest annual growth seen since 1991/92, outside the COVID-19 pandemic years.
Government response
Treasurer Jim Chalmers said the low GDP figures have been caused by “global economic uncertainty, persistent but moderating inflation, and higher interest rates.”
The Reserve Bank of Australia has set interest rates at 4.35%, which dictates the cost of borrowing money.
Chalmers said high interest rates were causing a fall in household spending.
“People are pulling back on spending to make room for essentials,” he said.
Opposition
Shadow Treasurer Angus Taylor said: “Australian households are really suffering”.
“It is also clear that real, disposable incomes, the standard of living of households in Australia, continues to go backwards.”
He blamed the Government’s handling of the economy, saying its failures “are coming home to roost”.
Recession?
The ABS figure shows Australia has hit a sixth quarter of “per-capita” recession, which is a measurement of growth per person.
That means the average person’s economic prosperity has gone backwards over the past 18 months.
This has been attributed to a drop in household spending, including on “discretionary” items — non-essential areas like holidays and restaurants.
However, Australia is not in a technical “recession” because overall growth has not dropped.
Independent economist Nicki Hutley told TDA that recent population growth has helped Australia avoid a recession.
Hutley attributed this, in part, to the birth rate and strong migration figures.
She said Australian exports and spending by governments of all levels were also helping to hold the economy “in place”.
Chief Economist of the independent think tank the Australia Institute, Greg Jericho, echoed this, saying Government spending has “helped stop the economy from shrinking”.
