Australia’s economy has recorded a slower annual growth rate of 2.1 per cent, according to the Australian Bureau of Statistics (ABS).
Economic activity grew by just 0.4 per cent in the June quarter, matching the subdued 0.4 per cent March quarter outcome.
It means the annual pace of growth for the economy has slipped from 2.7 per cent at the end of 2022, to just 2.1 per cent at the end of June, confirming a marked slowdown in the first six months of this year.
However, when you account for the rapid pace of population growth that’s occurring in Australia this year, figures show the amount of economic output per person has now declined for six months in a row.
Measured as GDP per capita, the figures show a decline of 0.3 per cent in the June quarter, following a similar decline of 0.3 per cent in the March quarter.
“The economy has now contracted for two consecutive quarters on a per capita basis — creating a so-called per capita recession — but a technical recession remains unlikely,” said former Reserve Bank economist Callam Pickering.
“Australia’s population is growing rapidly, supporting overall economic activity.”
Households finding it harder to save
Households have been using whatever finances they have to cope with rising interest rates and inflation.
The ABS data show the household saving ratio has fallen for the seventh consecutive quarter to 3.2 per cent, down from 3.6 per cent in the March quarter.
It’s the lowest level since June 2008, during the global financial crisis.
ABS officials say the fall in the rate of household saving has been driven by higher interest payments on dwellings (due to the Reserve Bank’s interest rate increases), higher income taxes, and greater spending by households to meet cost of living pressures.
“Today’s National Accounts data confirms what the RBA said in yesterday’s cash rate decision and what most households and businesses around Australia have already been feeling,” said Brendan Rynne, KPMG chief economist.
“Economic activity is flat and growth has largely stalled,” he said.
