Growth in the Australian economy has pulled back in the June quarter, as official figures released by the Australian Bureau of Statistics
yesterday revealed gross domestic product grew 0.5%. This is down from the 1.1% increase the March quarter witnessed.
This growth exceeded forecasts however, which saw economists predicting a slightly weaker growth of 0.4% for the quarter. The main drivers behind the result were an increase in household consumption, a surge in new home building and a rise in inventories.
The Housing Industry Association (HIA) has warned that everything may not be as it seems, though. Inventories, which contributed to the growth in GDP, aren’t always the most reliable economic predictor.
“Much of the growth which did take place was due to the highly volatile inventories component of demand, something which cannot be relied upon next time round,” cautioned Shane Garrett, senior economist at HIA.
Garrett said the overall performance of the economy was affected by weak international trade, but the slower growth experienced this quarter is unlikely to affect the market.
“International trade had helped boost growth in previous quarters. This time, the combination of a stronger dollar and lower commodities prices has resulted in net overseas demand actually hurting growth.”
“Today’s figures are unlikely to prompt any change in the RBA
’s strategy of low and stable interest rates. We should take some heart from the fact that growth occurred during a quarter dominated by particularly pessimistic discourse,” Garrett said.