Australia experienced the slowest economic growth in two years over the second quarter due in part to a sharp fall in export volumes, official data showed yesterday, knocking the Australian dollar to its lowest in over six years.
The Australian Bureau of Statistics said gross domestic product (GDP) expanded by 0.2 per cent in the second quarter, down from a solid 0.9 per cent the previous quarter. That was the slowest quarterly pace since the first quarter of 2013.
The closely-watched measure of real net national disposable income fell 0.7 per cent in the year to June.
“A lot of it appears to be statistical payback. Nevertheless, smooth out the last few quarters and it looks like we’re running at somewhere around a 2.3 per cent annual rate so it’s a soft outcome whichever way you cut it,” said Michael Blythe, chief economist at Commonwealth Bank.
The result also fell short of the median forecast of 0.4 per cent growth, and gave investors already fretting about China’s slowdown an added incentive to drive the Aussie dollar to below 70 US cents. Government and household consumption were among the biggest growth contributors in the quarter.
Exports of goods and services fell 3.3 per cent, while imports eased 0.7 per cent. The resultant net exports sliced 0.6 percentage points from GDP growth in the June quarter, the ABS said.
Yet the Reserve Bank of Australia (RBA) is likely to take the data in its stride, having set a low bar for growth in the year ahead. It sees growth between two and three per cent to June 2016, and on Tuesday left its cash rate steady at two per cent.
Overall, yesterday’s data showed the value of goods and services produced was worth A$1.61 trillion ($1.25 trillion) in current dollars, or about A$68,204 for each of Australia’s 23.8 million people.
Annual GDP measured in current prices grew 1.6 per cent, up from 1.3 per cent the previous quarter. Still it remained at the lowest since 2009, a budget headache for the government as it is this nominal growth, unadjusted for inflation, that determines tax revenue.