GDP figures show economic growth has slowed to a near standstill

ABC NEWS (Australia)

The GDP figure is the weakest result in three years - but some economists say it's going to have slow even further before interest rates start coming down here.

Transcript

00:00 So, they were weaker than expected. They came in at 0.1%, which means that annually over

00:07 the year growth is only running just over 1%. So, very, very slow. Like normally on

00:11 trend we'd expect around 3% growth per year. So, I think listeners can understand that

00:16 that is a significant slowdown and means the economy is growing a lot slower than we'd

00:21 normally like. The reason for that, of course, is that the Reserve Bank has been increasing

00:26 interest rates to try and slow the economy down, to bring inflation down. And in terms

00:32 of where the economy is now sitting, it is growing exceptionally slowly. We can see from

00:37 these figures in particular that household savings ratio is at sort of record lows, well

00:43 below trend. It shows that households are doing it pretty tough at the moment. And that

00:48 just more broadly, a lot of the heat that had been in the economy coming out of the

00:52 pandemic has definitely dissipated at this point. We'll get to more on interest rates

00:57 in just a moment, but there's been a lot of discussion this week about the R word of recession.

01:03 Do you agree with the Treasurer that Australia can avoid a recession here? Well, so in per

01:08 capita terms, we're actually in a recession. So, we've been going backwards for around

01:11 four quarters now. In terms of avoiding a recession completely, it would be quite difficult

01:17 for Australia to experience recession right now, given the high levels of migration and

01:21 that population growth that that represents, which is really underpinning, I think, the

01:25 economy more broadly at the moment. It's important both in terms of demand, but also supply in

01:30 terms of the labour market. So, look, I think overall we're unlikely to experience a recession,

01:36 but it's still certainly a possibility, especially if the Reserve Bank sees fit that it needs

01:40 to further increase rates to bring that inflation figure down.

01:44 [BLANK_AUDIO]

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