National Accounts - GDP - All Fired Up

• Gross domestic product (GDP) rose by a larger than expected 0.9% in the June quarter. Annual growth stepped up from 3.2% to 3.4%. It is the fastest annual rate of growth in five-and-a-half years and is above the 20-year average of 3.1%.

 

• GDP growth in the quarter was broad-based and was led by household and government spending. Together, these categories contributed 0.6 percentage points to GDP growth.

 

• Household consumption was solid despite high levels of household debt and slow wages growth. A decline in the household savings ratio indicated consumers continued to dip into their savings buffer to fund spending. Households are unlikely to be able to sustain this over the longer-term suggesting households will struggle to maintain its current pace of spending growth.

 

• The economy has grown at a robust pace over the first half of 2018, and above most estimates of potential growth. In light of today’s data we now have greater confidence that economic growth over 2018 will sit above 3%. We continue to expect that the economy will grow at a pace which will be at or close to the potential rate of growth over the medium-term. That said, there are downside risks to the RBA’s expectation for growth to average 3.25% in 2019.  

 

 

Please see the attached report for more information.

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