Australia's economy barely grows in first quarter as spending drops
SYDNEY - Australia's economy barely grew in the first quarter as consumers stayed stubbornly frugal and government spending, the engine of activity in 2024, sputtered to a standstill, underlining the need for more policy stimulus.
Real gross domestic product (GDP) rose 0.2 per cent quarter on quarter in the three months to March, Australian Bureau of Statistics (ABS) data showed on June 4, missing market forecasts of 0.4 per cent.
Year-on-year growth flatlined at 1.3 per cent, when analysts had looked for a pick-up to 1.5 per cent, and remained well short of the 2.5 per cent pace that used to be considered 'normal'.
The Reserve Bank of Australia has already cut interest rates twice since February to 3.85 per cent and the minutes of the May policy meeting showed that it was open to an outsized half-point move as US tariffs darkened the outlook for the global economy.
'While it's still too soon to know for sure, early signs point to an even larger drag from confidence on consumption and investment in Q2,' said Ben Udy, lead economist for Oxford Economics Australia.
'The RBA will be watching closely for further signs that the weakness in activity in Q1 extends into Q2 – if that evidence continues to rack up, the RBA may opt to cut rates again in July.'
Swaps imply an 80 per cent probability of a rate cut in July, with a total easing of almost 100 bps priced in to a bottom of 2.85 per cent by early next year.
'Extreme weather events reduced domestic final demand and exports. Weather impacts were particularly evident in mining, tourism and shipping,' said Katherine Keenan, ABS head of national accounts.
The report showed the household savings ratio jumped to 5.2 per cent, the highest since third quarter 2022, as consumers chose to save rather than spend. That is partly why household consumption edged up a tepid 0.4 per cent in the quarter, adding just 0.2 percentage points to GDP growth despite lower borrowing costs and cooling inflation.
In particular, government spending, which has single-handedly lifted economic growth over the past year, has disappointed to make the largest drag on growth since 2017.
Measures of inflation in the report showed a continued moderation with the deflator for domestic demand slowing to an annual 3.3 per cent from 3.5 per cent in the fourth quarter. REUTERS
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
an hour ago
- Straits Times
Trump says again he will set unilateral tariffs in two weeks
US President Donald Trump had initially suggested he would engage in talks with each partner but has moved away from that idea. PHOTO: DOUG MILLS/NYTIMES Trump says again he will set unilateral tariffs in two weeks WASHINGTON – President Donald Trump said he intended to send letters to trading partners in the next one to two weeks setting unilateral tariff rates, ahead of a July 9 deadline to reimpose higher duties on dozens of economies. 'We're going to be sending letters out in about a week and a half, two weeks, to countries, telling them what the deal is,' Mr Trump told reporters on June 11 at the John F. Kennedy Centre for the Performing Arts in Washington where he was attending a performance. 'At a certain point, we're just going to send letters out. And I think you understand that, saying this is the deal, you can take it or leave it,' he added. It is unclear if Mr Trump will follow through with his pledge. The president has often set two-week deadlines for actions, only for them to come later or not at all. The president on May 16 said he would be setting tariff rates for US trading partners 'over the next two to three weeks'. Mr Trump in April announced higher tariffs on dozens of trading partners only to pause them for 90 days as markets swooned and investors feared the levies would spark a global downturn. Yet despite the ongoing negotiations, the only trade framework the US has reached is with the UK, along with a tariff truce with China. But even the truce with China was threatened after Washington and Beijing accused each other or reneging on the terms, leading to marathon talks earlier this week in London on how to implement their agreement. Mr Trump earlier said on June 11 that the trade framework with China had been completed and would have Beijing supply rare earths and magnets, with the US allowing Chinese students to study at American colleges and universities. Asked on June 11 at the performance if he would extend the deadline for nations to cut deals with his administration before higher levies take effect, Mr Trump said he would be open to it. 'But I don't think we're gonna have that necessity,' he added. Mr Trump had initially suggested he would engage in talks with each partner but has moved away from that idea, prioritising talks with some key economic partners and acknowledging that the administration lacks the capacity to negotiate dozens of individual deals. Mr Trump's team is also working to secure bilateral deals with India, Japan, South Korea as well as the European Union. Commerce Secretary Howard Lutnick said earlier on June 11 that the European Union is likely to be among the last deals that the US completed, expressing frustration with conducting talks with a 27-nation bloc. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
3 hours ago
- Straits Times
European game generated 38 billion euros in 2023-24 season, study shows
Europe's soccer market grew by 8% in terms of revenue in the 2023-24 season to 38 billion euros ($43.46 billion) with England's Premier League generating the most, Deloitte said in a study published on Wednesday. In its Annual Review of Football Finance, Deloitte said the top five leagues -- Premier League, Bundesliga, LaLiga, Serie A and Ligue 1 -- generated 20.4 billion euros in revenue, an increase of 4%. Premier League clubs had the highest revenue of Europe's top leagues at 6.3 billion pounds ($8.50 billion). However, the traditional 'big six' clubs in England's top flight reported lower average revenue growth (3%) than other clubs that were in the Premier League in both the 2023-24 and 2022-23 seasons (11%). The study said the growth was largely driven by expansion of clubs' commercial offerings, which also led to the teams cumulatively generating more than two billion pounds in commercial revenue for the first time. "A focus on stadia development and diversification of commercial revenues led to growth across the European football market in the 2023-24 season," Tim Bridge, lead partner in Deloitte's Sports Business Group, said. "However, clubs and leagues cannot afford to take their eye off the ball as new challenges, including an evolving regulatory landscape and changing fan behaviours, arise. "The pressure is mounting for more clubs to drive additional revenue at the same time as managing rising costs. "More so than ever, leaders and owners must recognise the great responsibility they have of managing these businesses, capturing the historic essence of a football club while honouring its unrivalled role as a community asset for generations to come." Clubs in Europe's 'big five' leagues reported an aggregate operating profit (0.6 billion euros) for a second successive season, while the aggregate wages/revenue ratio fell from 66% to 64%. WSL REVENUE SOARS Clubs in England's Women's Super League (WSL) jointly generated revenue of 65 million pounds in the 2023-24 season, a 34% rise. Each WSL club had a double-digit increase in revenue, while all 12 clubs reported over one million pounds in revenue for the first time, with an average revenue of 5.4 million pounds. "Through developing more robust fan engagement strategies, strong commercial deals and securing central distributions, WSL clubs unlocked a new phase of growth," Deloitte Sports Business group's knowledge and insights lead Jennifer Haskel said. "Plus, as the reporting and attribution of commercial revenue remains inconsistent between clubs, we may be scratching the surface on the value now being generated by the women's game." REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
4 hours ago
- Straits Times
Trump's tariffs are likely to outlast him
US President Donald Trump at the White House on June 9. The writer says support for the liberal trading order founded after 1945 has evaporated. PHOTO: DOUG MILLS/NYTIMES Effective opposition to US President Donald Trump's trade policies has yet to pop its head above the parapet. Old-school pro-trade types are sidelined – consoling themselves, perhaps, that the protectionist turn will reverse once the costs are clearer. Be patient, we tell ourselves: This, too, shall pass. Will it? I don't doubt that the policies will fail. By itself, however, that won't restore the pre-Trump era. Join ST's Telegram channel and get the latest breaking news delivered to you.
