Australian Economy is Likely to Grow Below Trend in 2013

Recent data updates for Australia point to weaker growth in the quarters ahead. The recovery in consumer spending has been losing momentum in spite of low interest rates and business conditions remain very difficult as the mining-driven economy struggles to cope with a slowdown in China and lower commodity prices.
Anna Fedec, anna@tradingeconomics.com
8/6/2013 3:57:34 PM

In the first quarter of 2013, the GDP rose 0.6 percent qoq and 2.5 percent yoy driven by net exports. Consumption increased slightly, while investments and inventories decreased.
Business confidence lifted marginally in June, but remained lackluster due to weakness in domestic economy and concerns about global conditions. In June, exports fell 1 percent compared to May despite further decline in AUD.

In June, jobless rate hit its highest level in almost four years. Although total employment was up in June, full time employment continues to fall.
In July, Westpac Consumer Confidence decreased marginally after a rebound in June. In June, retail sales were little changed after 0.2 percent rise in May.

Key interest rate is at the record low of 2.5 percent.  Yet, interest rate sensitive sectors of the economy, such as consumer spending and house building, have been slow to respond. In June, housing starts declined 10 percent yoy and 7 percent mom.
Since mid April, Australian Dollar has depreciated 15 percent against its U.S. counterpart and on August 2nd, it touched 89.09 US cents, the lowest level in three years.




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