Australia’s GDP to see the second contraction in 3 quarters - NAB

Analysts at the National Bank of Australia (NAB) expressing their forecast on the Australian GDP figures for the March quarter due next week.

Key Quotes:

“Economic partials point to a modest contraction in real GDP in Q1 of -0.1% q/q. This would be the second contraction in three quarters, following the strong growth of 1.1% in Q4 2016 and decline of 0.5% in Q3 2016. The year-ended rate of growth will slow to 1.3% y/y, the weakest rate since Q3 2009”

“While some of the contraction has undoubtedly been driven by the weather and other one-offs (as in Q3 last year), the question for next week will be whether the slowdown includes signal as well as noise, and implies a more fundamental economic slowdown”

“On the upside, business investment looks to have been more encouraging this quarter and is no longer dragging on economic growth, while business conditions remain elevated. More problematic however is the slowdown in household consumption amidst poor wages and household income growth (albeit again there are some weather related effects here, some of which have already reversed). Should this continue, it is unlikely that forecasts of 3%+ growth from Treasury and the RBA will be met in the near term..”