Australia is on the cusp of another per capita recession – when economic growth per person shrinks. The latest GDP figures show Australia’s economy barely grew in March quarter, up 0.2 per cent and 1.3 per cent for the year. Australians are choosing to save more of their money, driving up the household savings ratio. The economy was only boosted by household spending on essentials like electricity, gas, rent and food. Private sector investment rose, led by housing construction, mining and manufacturing, however, the result was dragged down by the biggest pullback in government spending since 2017.
William Buck chief economist Besa Deda has described the economic recovery following COVID and high inflation “like a toddler that’s learning to walk and still shaky on her feet.”
Treasurer Jim Chalmers says the fact that the economy is growing at all is a “decent outcome”, saying “even modest growth is welcome in these global economic circumstances.”
Donald Trump’s unpredictable trade policies and his on and off again tariffs have fuelled global economic uncertainty, which economists say could push the Reserve Bank to lower interest rates again. Money markets are predicting a more than 80 per cent chance of a rate cut at the RBA’s next meeting in July. The odds of a rate cut in August are all but certain.
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