Australia's economy inches up by 0.2% as spending slowed down

Posted on March 8, 2024   |  

Australia's economy grew slowly in the December quarter due to reduced household incomes, leading to stagnant consumer spending.

Real GDP increased by only 0.2% in the fourth quarter, falling short of the expected 0.3% growth and the previous quarter's 0.3% expansion.

Annual growth dropped to 1.5%, the lowest since early 2021 when the economy was recovering from the pandemic.

Household spending didn't contribute to economic growth in the fourth quarter, as reduced discretionary spending offset higher essential spending.

GDP per capita declined by 0.3% in the fourth quarter, marking the third consecutive quarterly decrease.

Although the household saving ratio increased by 3.2%, it remained low compared to the previous quarter's 1.9% rise.

Net trade boosted growth in the December quarter as reduced imports added 0.7 percentage points to GDP growth.

The economic slowdown follows the Reserve Bank of Australia's efforts to tighten monetary policy to control inflation, with expectations of further slowing to 1.3% by mid-2024.