In the third quarter of 2024, Australia’s economy managed a modest growth of 0.3%, reaching a 0.8% increase compared to the previous year. This rate was below the anticipated 0.5% growth, as highlighted by the recent data from the Australian Bureau of Statistics (ABS).
Here’s a breakdown of the Q3 GDP report’s key insights:
– GDP per capita dropped by 0.3%, marking its seventh consecutive quarterly downturn.
– Public investment saw a significant rise of 6.3%, hitting unprecedented levels.
– Household spending remained stagnant, failing to recover from a 0.3% fall in Q2.
– The household saving ratio rose to 3.2%.
– The terms of trade declined by 2.5%, marking the third straight quarter of decrease.
Public expenditure was the standout contributor this quarter, thanks largely to increased government consumption and investment. Unfortunately, household spending remained lackluster, partly due to energy bill relief rebates which redirected spending from households to government figures.
When examining currency movements, the Australian dollar took a notable hit across various exchanges following the release of the GDP figures. It registered its most significant losses against the Canadian dollar, dropping by 0.70%, and saw a similar decline of 0.69% against the U.S. dollar. The fall against the New Zealand dollar was less pronounced, at 0.32%.
This market reaction likely stems from persistent weaknesses in GDP per capita and household spending, prompting speculation that the Reserve Bank of Australia (RBA) might adopt a more cautious approach in 2025. The tepid 0.3% growth rate, falling short of Australia’s potential, has raised concerns about the country’s economic vigor as it steps into the new year.
As of now, sellers are dominating the AUD’s price action, with the currency trading near session lows against most major currencies. This reflects market anxieties over yet another quarter of growth that lags behind the desired trend.
