Risks To GDP In Opposite Directions From Net Exports & Stocks

Q4 GDP prints on Wednesday and Bloomberg consensus is currently at 0.2% q/q in line with Q3’s result. The release will be monitored closely not just to gauge the pace of the economy and consumption in particular, but also for signs of improvements in productivity growth. The higher-than-expected net export contribution skews the risks to GDP to the upside, while the 1.7% q/q drop in inventories to the downside.

• The ABS estimated the net export contribution at 0.6pp, driven by weak import volumes, whereas economists expected it to be 0.2pp. This is unlikely to be any different in the Q4 national accounts, whereas the size of the detraction from the 1.7% q/q drop in inventories is less clear.
• Retail sales volumes rose 0.3% q/q in Q4 but the performance of the larger services component is currently unknown. Government finance data is citing a 0.1pp contribution to Q4 growth from general government consumption with total public GFCF neutral. Private capex rose 0.8% q/q.
• Bloomberg consensus is forecasting Q4 GDP to rise 0.2% q/q and 1.4% y/y from 0.2% and 2.1% in Q3. Projections range from zero to +0.5% q/q and 1.0% to 1.7% y/y, with all submitted before this week’s net export, government and inventory data. CBA and NAB are in line with consensus, while ANZ is slightly higher at 0.3% and 1.5% respectively. Westpac was expecting zero growth at the end of February as 0.2pp from domestic demand and 0.1pp from net exports would be offset by 0.3pp of destocking.