Australia’s economic expansion decelerated in the three months through September as imports jumped, reflecting robust consumption and households’ resilience to the Reserve Bank of Australia’s (RBA) interest rate increases.
GDP advanced 0.6 percent from the second quarter of this year, when it climbed 0.9 percent, official data showed yesterday.
From a year earlier, the economy grew 5.9 percent, a result bolstered by the comparable period of last year being affected by COVID-19 lockdowns.
Photo: AP
“Households are still saving and slightly above the pre-pandemic pace, but the easing trend is noticeable as higher cost of living continues,” said Su-Lin Ong (翁蘇林), head of Australian economic and fixed-income strategy at Royal Bank of Canada. “We expect both household consumption and the savings ratio to ease further.”
The household savings ratio in the third quarter slid to 6.9 percent from 8.3 percent three months earlier as consumers tapped their bank accounts to fund spending.
Australians built up savings of more than A$200 billion (US$133.9 billion) during the COVID-19 pandemic.
Photo: REUTERS
“The growth part of the national accounts will not be much of a surprise to the RBA,” Ong said. “But some of the wage and price measures may be more so, and remain consistent with further tightening and the need to move into firmly restrictive territory.”
The central bank has increase interest rates 3 percentage points since May to take the cash rate to a 10-year high of 3.1 percent.
It forecasts headline inflation to peak at 8 percent in the current quarter and then gradually fall back.
Money markets are pricing in a key rate of 3.6 percent by the middle of next year, which is also the median estimate of economists.
However, most observers expect the economy to keep growing, albeit at a slower pace. That contrasts with mounting concerns about recession in the US and other advanced economies.
RBA Governor Philip Lowe has expressed confidence that he can deliver a soft landing despite the central bank’s sharpest annual tightening since 1989.
The central bank’s forecasts show GDP growth slowing to 2.9 percent at the end of this year, then to 1.4 percent next year and 2024 due to higher borrowing costs.
Still, unemployment is expected to stay below 4 percent until 2024, from a current 48-year low of 3.4 percent.
The GDP report also showed that household consumption last quarter climbed 1.1 percent and non-housing construction rose 8.6 percent, while ownership transfer costs from when houses are bought or sold tumbled 11.2 percent.
“This is a really solid outcome in the circumstances,” Australian Treasurer Jim Chalmers told reporters after the release. “This paints a picture of an economy which is relatively robust despite the substantial challenges thrown at it from around the world.”
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