After witnessing the 2009 Global Financial Crisis, the Australian economy has dangled lower and lower even to its weakest levels. No one could clearly predict these after the incident one decade ago but signals were observed in time past by the Australian Economists.
The data released by the Australian Bureau of Labor Statistics shows that there was a growth of about 0.4% in three months to March and by close to 1.8% in the just concluded year. Reserve Banks therefore have no other choice than to begin cutting down citizens cash rate to the barest minimum. This of course had a tremendous effect on Australian and foreigners.
The government made a good contribution to put the economy back in shape by directing enough fund to disability, health and care services for the aged.
Though the annual growth had fallen from 2.4 per cent in the year to the end of December. The currency strategist Sean Callow said in a tweet that the economy’s reliance on infrastructure spend was a “miserable detail” in the ABS figures.
Sean Callow wrote on his Twitter page @seandcallow:
Miserable details in Aust GDP: Main growth driver was govt spending on health, aged care, NDIS while household spending just 0.1ppt contribution due to “reduced spending on discretionary goods” & services.
This is because people fail to make spending especially on household equipment including furniture and only fewer non-essential goods and meals at restaurants are bought.
Also, Treasurer Josh Frydenberg commented that the looming lower and middle income tax cuts and the official interest rate falling 25 basis points to 1.25% will allow consumers to improve on daily spending. He further mentioned that:
“The provision of the tax cuts, as well as the interest rate decision yesterday, will boost household disposable incomes and will be important as part of compensation.”
The Treasurer also recently supported the idea of enhancing employment growth to move the economy beyond the present bad level while he also admits that “there are some challenges” related to weak inflation and the struggling property market.
Mr Frydenberg told Nine’s Today program: “We are facing economic challenges both domestically and internationally, particularly from the trade tensions between China and the US”.
The AMP Capital chief economist, Shane Oliver said the economy’s recent dependency on investing in government projects and net exports kept the growth from flattening out completely.
But this will come to an end next year and Australia will have a higher risk of recession, he said.
He said in a note that:
”The outlook for 2020 looks challenging as government infrastructure spending looks like it will slow after this year, residential construction looks likely to continue to decline, the consumer is expected to remain weak and risks are building around the global economic outlook as a result of (US President Donald) Trump’s trade wars,”
“More RBA interest rate cuts along with fiscal stimulus are likely to be necessary to offset the threat to growth.”