Australia’s first-quarter economic growth misses estimates on severe weather, weak demand
Tourists sit on a barrier at the Sydney Opera House.
Afp Participant | Afp | Getty Images
The Australian economy lost momentum in the first quarter as a decline in household spending, a decline in government consumption and severe weather conditions in mining and exports dampened momentum.
The country’s GDP increased by 2.5% in the first three months of this year compared to the previous year; It fell short of economists’ expectations for 2.6% growth and has slowed since 2017. 2.6% growth in the previous quarterAustralian Bureau of Statistics data showed on Wednesday.
On a quarterly basis, Australia’s GDP rose 0.3% compared to the 0.5% forecast in a Reuters poll, slowing from 0.8% growth in the previous quarter.
The statistics bureau said the modest growth was partly due to strong investments in data center machinery and equipment.
The Reserve Bank of Australia became the first central bank among advanced economies this year to raise interest rates after the economy recorded its strongest quarterly growth in nearly three years in the final quarter of last year.
The central bank achieved its third interest rate increase in May this year, meeting its cash rate target increased by 25 basis points to 4.35% Last year’s economic resilience revived inflation pressures.
Australia’s 10-year government bond yield rose to 4.898% after the data was released, after gaining nearly 24 basis points since the start of the Iran war on Feb. 28, according to LSEG data. The S&P/ASX 200 rose 0.5% while the Australian dollar was little changed at 0.7176 against the greenback.
The country’s growth outlook has been darkened by the ongoing conflict in the Middle East, which has effectively halted the flow of oil through the Strait of Hormuz and caused energy and commodity prices to rise globally. Although Australia is a net exporter of energy, continued increases in commodity costs could ultimately put pressure on consumer demand.
Bank of America Australia and New Zealand economist Nick Stenner said on Monday that first-quarter data would be “too early to capture any material impact from the conflict” and that negative growth impacts would be more likely to be felt in the second quarter.
The Reserve Bank of Australia will likely focus on the strength of private demand and inflation risks from weak productivity and rising unit labor costs before factoring in conflict, according to Stenner, who expects household consumption to weaken in the second quarter.
The RBA expects economic growth to slow to 1.3% by the end of this year. May declaration.
