December 4th 2024.
The latest data on Australia's economy shows that its growth rate has slowed down even more, with only a 0.3 per cent increase in the September quarter and a mere 0.8 per cent increase over the past year. This may have come as a surprise to some, as initial expectations were for a higher growth rate. However, when looking at the growth per capita, the economy actually took a step back with a decrease of 0.3 per cent.
In response to these figures, Treasurer Jim Chalmers acknowledged that while the growth is technically considered positive, it is still quite weak. He pointed out that there are several factors weighing down the economy, such as high interest rates, rising costs of living, and global uncertainty. Chalmers made these remarks in a statement released today, highlighting that the current growth rate falls below both historical averages and market expectations.
One particularly concerning aspect of the data is the stagnant household spending, despite recent tax cuts and pay increases. Chalmers noted that household consumption has remained mostly unchanged throughout 2024, and actually did not grow at all in the September quarter. Over the past year, it only saw a meager 0.4 per cent increase. This lack of spending is likely due to households tightening their belts, with discretionary consumption experiencing a 1.1 per cent decline over the year. This is not surprising, as interest costs have tripled since before the last election.
Even with these disappointing figures, the economy still remains above the RBA's target range of 2 to 3 per cent. However, the central bank has signaled that it would need to see a sustained and significant decrease in inflation before considering a cut to the cash rate, which currently stands at 4.35 per cent. It seems that for now, the Australian economy will continue to face challenges and may require further action to stimulate growth.
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