Australian Q3 GDP to disappoint yet again – Westpac

According to Andrew Hanlan, Analyst at Westpac, “the Australian National Accounts, to be released on Wednesday December 4, will provide an estimate of economic activity for the September quarter, including any boost to date from recent policy stimulus.”

Key Quotes:

“We anticipate yet another disappointing report card - with growth lopsided and private demand weak.

The backdrop, the economy lost considerable momentum from mid-2018. Annual real GDP growth slowed from an above trend 3.1% to 1.4% currently - the softest result since 2009 and a pace below population growth, of 1.6%.

Tail winds are from: brisk government spending (in the form of public demand), with a focus on health and investment; the export uptrend, associated with the lower dollar; and recent higher commodity prices, boosting national income (in particular mining profits and government tax revenue).

RBA rate cuts and modest personal income tax cuts have had a mixed impact to date. Consumer spending remains weak, while the housing sector is responding - albeit in an uneven fashion, with prices rising but dwelling approvals still soft.

National income has been a point of strength, underpinned by the recent uptrend in commodity prices. The terms of trade in Q3 grew by an estimated 0.5%qtr, 8.3%yr. Nominal GDP growth is a forecast 1.0%qtr, 5.2%yr.

Looking ahead, our assessment is that output growth will strengthen in 2020, but still be at a below trend pace given the ongoing challenging environment. The unemployment rate will likely grind higher next year, rising to around 5.6%.”