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Australia national accounts – growth plummets, per capita recession

The Australian Bureau of Statistics released the latest December-quarter 2018 National Accounts data today (March 6, 2019) and we learn that in the last 6 months of 2018, the Australian economy descended into a recession in GDP per capita terms. That is, for the last two quarters of 2018, growth in GDP per capita was negative. However, due to a fairly strong terms of trade, Real net national disposable income rose, which signifies rising material living standards. Overall, the Australia economy has slowed considerably. The quarterly growth rate fell to just 0.2 per cent and 2.3 per cent (down from 2.8 over the 12 months to December 2018). However, the annual result is influenced by the outlier March-quarter. The annualised growth rate is really around 0.8 per cent, which is very poor. The economy remains reliant on household consumption expenditure, which is now moderating. Both private sector investment and the external sector are detracting from growth. The stark result is that without the contribution of the government sector, the Australian economy would have been deemed to be in recession now. There is a high probability that household consumption expenditure will slow further. The overall picture is not good and the future is looking rather dim at present.

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