The Australian economy is effectively in limbo according to the latest ABS figures released this week. Nationwide GDP rose just 0.2% in the June quarter and 1% throughout the year, predominantly on the back of government spending.
The squeeze on household budgets is reflected in the fact that GDP per capita declined 0.4% , continuing a downward trend for the sixth consecutive quarter. This is equivalent to three back-to-back per-capita recessions and is being felt across a number of business sectors — particularly those that rely on discretionary consumer spending.
In the absence of measures to fuel productivity, the low level of GDP growth we are seeing is being driven by Ha growing population, full employment and high levels of government spending.
Outside of the pandemic, it is the slowest annual rate of economic growth since the early 1990s recession that we‘had to have’. Economic growth has averaged around 2.7% over the past two decades.
Federal Treasurer Jim Chalmers interpreted the figures as an“inevitable” consequence of global economic uncertainty”.
Household savings ratio remains at 0.6% in the quarter. It has been at or below 3% since December 2022. This is in stark contrast to the Covid pandemic period, when the savings ratio was above 10% for nearly two years.
