Australia: maintains a positive tone, but the pace of growth slows down
2024-03-07
■ As of the October-December quarter of last year, Australia's real gross domestic product (GDP) growth has slowed down for four consecutive quarters, and personal consumption has remained sluggish
■ External demand supports Australia's growth, but in the face of uncertain economic prospects, attention should be paid to the policy response of the Reserve Bank of Australia (RBA)
According to the Australian Bureau of Statistics, as of the October-December quarter last year, real GDP grew by 0.2% compared to the previous quarter, slowing down for four consecutive quarters and becoming the lowest growth since the July-September quarter of 2022. The growth trend of government expenditure remains (0.6% growth), but personal consumption, which accounts for nearly 50% of GDP (0.1% growth), continues to be sluggish. Although the expenditure on daily necessities such as food, electricity, and rent has increased, the discrete expenses of hotels, cafes, clothing, and others have decreased, and the contribution of personal consumption is zero. At the same time, the net export contribution of goods and services was 0.6 percentage points, mainly due to the decline in imports of goods and services (a decrease of 3.4%) exceeding the decline in exports (a decrease of 0.3%). While domestic demand is weak, external demand has become the pillar of economic growth. It is worth noting that the year-on-year growth of 1.5% exceeded market expectations (growth of 1.4%), but reached a low level since the October- December quarter of 2020.
At the National People's Congress of the CPC (NPC), which began yesterday, the market generally believed that the specific policies to stimulate the economy lacked clarity, except that the target of real GDP growth rate in 2024 was the same as that of last year. If the Chinese economy cannot recover, a decrease in Australia's supply of iron ore, coal, and other resources to China may raise concerns, and there is also uncertainty about whether Australia's external demand can remain strong. In addition, the household savings rate in Australia from October to December last year was only 3.2%, remaining at a relatively low level. The recovery expectations for personal consumption are facing difficulties, and domestic demand may continue to be sluggish. After Australia released today's economic indicators, due to reduced market expectations for further news, the AUD/USD remained at the latter half of $0.64 before rebounding to $0.65. The exchange rate against the Japanese yen also rebounded slightly, rising from the first half of 97 yen to the second half. The Reserve Bank of Australia (RBA) may maintain policy interest rates unchanged at its board meeting on the 19th of this month, but is concerned about how slow the growth will affect future monetary policy.
■ External demand supports Australia's growth, but in the face of uncertain economic prospects, attention should be paid to the policy response of the Reserve Bank of Australia (RBA)
According to the Australian Bureau of Statistics, as of the October-December quarter last year, real GDP grew by 0.2% compared to the previous quarter, slowing down for four consecutive quarters and becoming the lowest growth since the July-September quarter of 2022. The growth trend of government expenditure remains (0.6% growth), but personal consumption, which accounts for nearly 50% of GDP (0.1% growth), continues to be sluggish. Although the expenditure on daily necessities such as food, electricity, and rent has increased, the discrete expenses of hotels, cafes, clothing, and others have decreased, and the contribution of personal consumption is zero. At the same time, the net export contribution of goods and services was 0.6 percentage points, mainly due to the decline in imports of goods and services (a decrease of 3.4%) exceeding the decline in exports (a decrease of 0.3%). While domestic demand is weak, external demand has become the pillar of economic growth. It is worth noting that the year-on-year growth of 1.5% exceeded market expectations (growth of 1.4%), but reached a low level since the October- December quarter of 2020.
At the National People's Congress of the CPC (NPC), which began yesterday, the market generally believed that the specific policies to stimulate the economy lacked clarity, except that the target of real GDP growth rate in 2024 was the same as that of last year. If the Chinese economy cannot recover, a decrease in Australia's supply of iron ore, coal, and other resources to China may raise concerns, and there is also uncertainty about whether Australia's external demand can remain strong. In addition, the household savings rate in Australia from October to December last year was only 3.2%, remaining at a relatively low level. The recovery expectations for personal consumption are facing difficulties, and domestic demand may continue to be sluggish. After Australia released today's economic indicators, due to reduced market expectations for further news, the AUD/USD remained at the latter half of $0.64 before rebounding to $0.65. The exchange rate against the Japanese yen also rebounded slightly, rising from the first half of 97 yen to the second half. The Reserve Bank of Australia (RBA) may maintain policy interest rates unchanged at its board meeting on the 19th of this month, but is concerned about how slow the growth will affect future monetary policy.