• Real GDP rose by a modest 0.6% in Q1 2013 and annual growth stands at a below trend pace of 2.5%.
• The growth drivers were net exports and consumer spending. Underlying investment and stocks detracted from growth.
• The necessary transition to non-mining led growth is hesitant and slow. Higher confidence levels are needed.
• The low QI inflation outcomes support another RBA rate cut. The GDP deflator is only 0.3% higher over the year.
• Nominal GDP rose by 1.3% in QI to be 3.0% higher over the year. It was lifted by the terms of trade rise of 2.7% in QI.
Today’s relatively soft growth figures will support the calls for another RBA interest rate cut in coming months. Net exports and a modest rise in consumer spending, mainly in the retail sector, lifted growth. Without the significant contribution from net exports sector the domestic economy went backwards in QI. Total dwelling investment was flat in QI even though interest rates are at quite stimulatory levels. New housing spending rose but alterations and additions fell.
Read the full report: Economic Research
Commonwealth Bank