(Bloomberg) – Australia’s economy grew faster than expected in the last quarter as households used their savings to increase spending, underscoring the central bank’s view that the country has entered a new lockdown with strong dynamic.
Gross domestic product rose 0.7% in the three months to June compared to the previous quarter, when it rose 1.9% revised upward, data from the Australian Bureau of Labor showed on Wednesday. statistics. Economists had forecast a gain of 0.4%. From a year earlier, when GDP fell in response to Covid, the economy grew 9.6%.
The result underscores Australia’s powerful recovery from the virus throughout the first part of the year, when it recovered production and jobs lost during the 2020 shutdowns. It is under threat of a delta epidemic that started in Sydney – now in its 10th week of lockdown. The infections have spread along the east coast, forcing shutdowns across the economy, as in many parts of Asia.
What Bloomberg Economics Says
“Q2 GDP and the rebound since H2 2020 highlights how quickly the economy can recover with fiscal support once the virus is cleared and lockdown restrictions lifted. Australia’s recovery from the third quarter lockdown is likely to be more subdued, reflecting reduced budget support and a gradual easing of restrictions as the economy adjusts to life with the virus. “
–James McIntyre, economist
Household spending rose 1.1%, adding 0.6 percentage point to GDP, driven by consumption of services as virus restrictions were relaxed in Australia before the delta outbreak and a drop in the rate of d ‘saving. A 1.2% increase in earnings in the last quarter, due to increased employment and hours worked, also helped fuel spending.
Today’s report also showed:
Public spending rose 1.3%, adding 0.3 percentage point Housing activity continued to contribute to growth, with property transfer costs rising for a fourth consecutive quarter, advancing 10% and adding 0.2 percentage point. in mining raw materials as a result of disruptions in both coal production and the transport of iron ore to ports .; construction excluding housing fell by 1.9%, declining by 0.1 percentage point The household savings rate fell to 9.7% in the second quarter from 11.6% in the first three months of the year
The data, even more than normal, offered a glimpse of the economy through the rearview mirror, as Australia’s two largest cities are stranded to tackle the Delta epidemic.
Recovery to come
“But today’s press release underscores that when restrictions are relaxed fiscal and monetary policy is favorable, and households and businesses are confident in the outlook – and in the Covid situation – the economy will recover.” said Sarah Hunter, chief economist at the BIS. Oxford Economy.
The Australian labor market had tightened rapidly until the outbreak in the Delta. The unemployment rate fell to 4.6% in July, the lowest level since 2008, although this was largely due to a drop in participation as Sydney residents were unable to look for work.
Unemployment is expected to rise in the coming months due to restrictions imposed to tackle the delta.
On a more positive note, in response to the worsening epidemic, authorities have stepped up vaccinations as they seek to emulate their northern hemisphere counterparts by trying to navigate an approach to living with the virus.
The central bank has so far maintained that the Australian economy will rebound quickly after the last outbreak, as it did in 2020. However, the prolonged duration of lockdowns and the likelihood that the virus will not be removed quickly could throw doubt about such a result.
(Updates with comments from economists in the fourth, eighth paragraphs.)
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