Australia's GDP increases 0.2% in Q1 2023: ABS

The GDP implicit price deflator, a measure of inflation, rose 1.9 per cent in the March quarter and by 6.8 per cent compared to March 2022. This was largely driven by a rise in the terms of trade by 2.8 per cent, owing to a steeper fall in import prices (down 4 per cent) than export prices ( down 1.4 per cent).

The decline in import prices, the largest since December 2010, was attributed to the global drop in oil prices and the strengthening of the Australian dollar.

“This is the sixth straight rise in quarterly GDP but the slowest growth since the COVID-19 delta lockdowns in September quarter 2021. Private and public gross fixed capital formation were the main drivers of GDP growth this quarter,” said Katherine Keenan, ABS head of national accounts.

The March quarter also witnessed slower domestic price growth, moderating to 1.1 per cent following a 1.4 per cent rise in the December quarter of 2022, as goods inflation eased.

On the investment front, both public and private sectors showed positive trends in Q1 2023. Private gross fixed capital formation saw an increase of 1.4 per cent, recovering from a 0.9 per cent fall in the December quarter. Public gross fixed capital formation also grew by 3 per cent, bouncing back from a 1.2 per cent dip in the preceding quarter.

Moreover, the compensation of employees increased by 2.4 per cent, following a 2 per cent rise in the previous quarter. This continued strength was underpinned by the tight labour market, as the unemployment rate remained historically low and job vacancies were elevated. Factors such as increased employment, longer work hours, pay hikes, and bonuses in the public sector also contributed to this increase.

However, net trade contributed negatively to the GDP, deducting 0.2 percentage points as imports (3.2 per cent) grew more than exports (1.8 per cent). Goods exports rose due to an increase in rural goods exports, although this was partly offset by a fall in coal exports. On the other hand, the 3.3 per cent increase in goods imports was largely driven by consumption goods (up 4.9 per cent), which was slightly offset by a 1.1 per cent fall in intermediate goods.

Fibre2Fashion News Desk (DP)