MNI INTERVIEW: Australian Growth Still Volatile, Says ABS

Australia’s economic growth has still not normalised after the pandemic lockdowns and supply chain issues have combined with war in Ukraine to create ongoing volatility, a senior official from the Australian Bureau of Statistics told MNI on Wednesday.

Jacqui Vitas, the head of macroeconomic statistics at the ABS, told MNI that while some measures, such as consumer spending on restaurants, were almost back to pre-pandemic levels in Q1 there were ongoing distortions from the pandemic.

“There is still some volatility in the result, and it is difficult to unpick,” said Vitas. “It’s too early to call the end of pandemic’s impacts on supply chain issues and the terms of trade, even if we have moved to the endemic phase.”

The ABS released national accounts data showing the economy grew 0.8% during the first quarter of 2022, delivering annualised growth of 3.3%. This was after a 3.6% surge in the last quarter of 2021 delivered 4.2% growth year on year.

The Reserve Bank of Australia is basing its monetary policy outlook on forecasts of 3.6% growth to the end of the second quarter, and 4.2% by the end of the year, (See MNI STATE OF PLAY: RBA Could Take Rates To 2.5%, Says Lowe).

EXAMPLE

An example of the ongoing volatility was a 32% surge in the importation of new vehicles after recent supply chain disruptions, a factor which saw the current account surplus shrink by A$5.7bn and crimp the GDP result by 1.7 percentage points.

On the other hand, domestic final demand added 1.6pps to GDP as consumer spending increased. Spending on transport services jumped 60% as the Western Australian economy opened again.

While household spending levels remained elevated, they declined 2 percentage points as pandemic conditions eased.