Here's A Preview Of Australian GDP From One Of The Most Bullish Banks

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The Australian Bureau of Statistics will release the Q2 2014 GDP data at 11.30am and according to the Bloomberg survey, the market has a big range of +0.1% to +0.6% growth for the quarter.

Among the bulls were the economics teams at the ANZ, Commonwealth Bank and TD Securities.

We asked Felicity Emmett, senior economist at ANZ, for the rationale behind her 0.6% call. Here is what she told Business Insider:

Q2 GDP growth looks set to come in at +0.6% q/q and +3.2% y/y. A 0.6% q/q gain in GDP would be a particularly good result given it follows a strong 1.1% gain in Q1 and would leave six month annualised GDP growth at a strong 3.4%.

Part of the strength in Q2 GDP growth reflects the bounce in inventories, which will add a massive 1pp. Growth in household spending is likely to remain relatively modest, dwelling investment should post a moderate rise, and business investment is likely to post a small fall and net exports are set to take a large 0.9ppt off growth. Underlying public spending, though, looks to be quite strong. Strength in GDP in Q2 though looks likely to come through on the income measure of GDP, with the wages bill and small business profits growing relatively solidly in the quarter, and profits not as weak as we had earlier expected.

But Emmett also has warning about the future of growth, which she says tempers what should be a good release:

While this is an encouraging result given the headwinds the economy is currently facing, we would caution at reading too much into it. That is, the drag from the wind down in mining investment still has a long way to run and is likely to be much larger over coming quarters. Moreover, the non-mining recovery remains tentative with the structural weight of the falling terms of trade and lower public spending likely to weigh on growth for some time.

We’ll have full coverage live here at 11.30am.

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