Australia's GDP growth too low for comfort - ANZ

Felicity Emmett, an analyst at ANZ, notes that Australia’s quarterly GDP growth picked up a little in Q1 to 0.4% q/q, although annual growth continued to slow and is now down to 1.8%, its slowest pace since 2009 in the midst of the global financial crisis.

• “The weak tone to GDP confirms the dovish stance taken by RBA Governor, Phil Lowe, but the Bank is likely to be disappointed yet again by these data. The result looks to be less than the average 0.6-0.7% q/q growth the RBA had expected for Q1 and Q2. And unless Q2 partials pick up strongly it suggests that another round of growth downgrades in the Bank’s August Statement on Monetary Policy.
• The report shows that weakness in the economy has become more broadly based, and the supports to growth more narrow.
• Overall GDP growth continues to be held down by a weak household sector, under pressure from persistently low-income growth, high debt and falling house prices.
• Ultimately, the Q1 GDP data provide further confirmation that the economy likely needs more stimulus to generate stronger growth, lower unemployment and higher inflation.”