The Australian economic growth is expected to have contracted in the first quarter. According to an ANZ research report, the GDP is expected to have declined 0.2 percent quarter-on-quarter in the first quarter. This might see annual growth decelerate to 1.5 percent.
The -0.2 percent figure is slightly weaker than the previous expectation of -0.1 percent released last week, with the effect of the partial data released today bringing down the estimate. The main new pieces of inflation since then are weaker-than-initially-expected inventories and wages. Government spending, profits and net exports were widely consistent with expectations.
The GDP figures are quite dated now, with focus moving to the magnitude of the downturn in the second quarter, and the shape and timing of the recovery. However, what the first quarter national accounts will show is some of the initial effect of the pandemic and the early measures to contain its spread.
There is more than the usual level of uncertainty around these forecasts given the range of large countering factors such as; the considerable drop-off in activity towards the end of the quarter as a result of the shutdowns, the effect of bushfires on the hospitality sector; the lift in public spending on the bushfire rebuild, and the measures designed to underpin the hospital sector during the pandemic.
“We are expecting a 0.6% decline in consumer spending, but given the uncertainty this could prove to be a key swing factor for overall GDP”, added ANZ.
