MNI 5 THINGS. Australia Growth Slows, RBA Watchful

By Lachlan Colquhoun

     SYDNEY (MNI) - Australian GDP data released Wednesday showed the economy

continues to slow, with growth coming in at 0.2% for the December quarter.

     Here are five factors from data released by the Australian Bureau of

Statistics.

Result as forecast. 

The market was braced for the data to show a continuation of the economic

slowdown, and the 0.2% Q4 result was as many expected following weak data seen

earlier in the week, although some analysts were forecasting a lower figure. On

an annualised basis the economy grew at 2.3%, down from 2.8% in Q3 and 3.3%% in

Q2.

"Per capita recession" 

     GDP data shows that on a per capita basis the Australian economy has

entered recession for the first time since 2006, with the economy now relying on

population increases to fuel growth. The data shows that economic growth per

capita fell by 0.2% in the December quarter and by 0.1% in Q3, delivering two

consecutive quarters of negative growth.

RBA outlook changing. 

     The Reserve Bank of Australia continues to change outlook as evidence of

the economic slowdown mounts up. Last year, the RBA was anticipating growth of

3.5% through 2019 and was pondering the timing of an interest rate rise. Today,

Governor Philip Lowe all but ruled out the likelihood of a rate hike this year.

The Bank now has a balanced view and has said that a rate cut is possible over

time if the economy continues to falter.

Government expenditure strong. 

     Government expenditure continues to support the economy, rising 1.8% during

the quarter and contributing 0.3 percentage points to GDP growth.

Household spending weak. 

     The RBA is relying on consumers to increase their spending, but the data

continues to stagnate. Household spending rose by a modest 0.4% in Q4, adding

0.2 percentage points to economic growth.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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