Second quarter growth data will likely paint a grim picture of Australia’s economy on Wednesday as it reels under slowing exports and consumption. Gross domestic product (GDP) growth decelerated to 0.4 percent on quarter, according to a Reuters poll, following a 1.1 percent expansion in the first quarter.
“A slowdown in exports after the first quarter’s unsustainable surge is the main driver,” Moody’s Analytics wrote in a note. “Household consumption also slowed as consumers lost their nerve after the ‘tough’ federal budget.” In the three months to end-June, the seasonally-adjusted trade deficit was $4.8 billion, compared with an almost $3 billion surplus for the previous quarter, according to the Australian Bureau of Statistics (ABS).
However, some economists believe a soft GDP reading would merely be “smoke without fire.” “A soft or negative Q2 [reading] for GDP will create plenty of headlines. We wouldn’t read too much into it though,” said National Australia Bank. “[It would follow] a rapid Q1 – so probably best to read these two numbers together.”