Australia’s gross domestic product fell by 0.5% in the December quarter, seasonally adjusted, making it a near certainty that Australia will be recession by the middle of the year.
But we are not there yet – the Australian Bureau of Statistics says it does not need to revise the GDP data for the September quarter, which showed economic growth of 0.1%.
The GDP data – which showed that GDP grew by just 0.3% over calendar 2008 – has surprised many economists, who expected the GDP figures would show the Australian economy grew by 0.2% in the December quarter, taking the annual figure to 1.2%.
It is the first negative GDP growth data in eight years.
The fall in economic growth comes just a day after the Reserve Bank decided to leave interest rates on hold at 3.25%, with RBA Governor Glenn Steven claiming that “in Australia, demand has not weakened as much as in other countries and, on the basis of currently available information, the Australian economy has not experienced the sort of large contraction seen elsewhere”.
Matt Robinson of Moody’s Economy.com is scathing in his assessment of the Governor’s claims. ”This is inevitably the first quarter of Australia’s recession, that it’s currently in,” he says.
”It makes a mockery of the comment from RBA yesterday that Australia hasn’t seen the sizeable contraction in demand that other economies have seen.”
- Reasons to be cheerful from RBA chief Glenn Stevens
- Australia’s inexorable run into deficit, and poll says we’re not happy about it
- The RBA Governor is “quietly confident” we can avoid recession. Here’s why he is wrong