If there’s a trend in Australia’s GDP inputs received so far, it’s that they’ve been underwhelming.
Hardly inspiring news, no matter which way you paint it.
However, despite the gloom, that doesn’t mean that Australian GDP will be weak, says Felicity Emmett, head of Australian economics at the ANZ. She suggests growth may have actually accelerated in the first three months of the year.
“Our preliminary estimate for Q1 GDP is for a rise of 0.8% q/q. This result follows a moderate 0.6% q/q rise in Q4 and would see annual growth tick back down to 2.9% from 3.0%,” says Emmett.
Although a bullish growth figure should it eventuate, Emmett acknowledges that the domestic economy is “soft”, with growth expected to be driven by net exports due to an uplift in commodity export volumes.
“This would be a solid headline result, although growth in the quarter looks to have been driven largely by net exports, while domestic demand growth remains soft,” she says.
“We forecast net exports will add a substantial 1.1ppts to growth in Q1 as new supply comes on stream.”
In other words, if correct, GDP inputs outside of trade are expected to detract 0.3 percentage points from quarterly growth.
While in volume terms Emmett believes growth will accelerate, she suggests national incomes will remain weak.
“Profits look to have been weak in the quarter, with our forecast of a fall of 1.8% in company profits driven by sharply lower export prices,” she says.
“Growth in the wages bill is expected to be relatively modest given softer employment growth. With the focus on weak wage growth at the moment, the average wage measure in the national accounts will be of particular interest to policy makers.”
The table below, supplied by ANZ, reveals the bank’s forecasts for GDP, along with individual inputs. As there are still a number of GDP components yet to arrive, the bank will review these forecasts ahead of the GDP release next Wednesday.