Australia’s economy stuck on slow track, household spending slows By Reuters

SYDNEY (Reuters) – Australia’s economy remained stuck on the slow path in the June quarter as punishing borrowing costs and stubborn inflation squeezed consumers, leaving government spending as the main driver of growth.

Data from the Australian Bureau of Statistics showed on Wednesday that real gross domestic product (GDP) rose 0.2% in the second quarter, unchanged for three straight quarters. It was slightly below market expectations of 0.3%.

Annual growth slowed to 1.0% from 1.2% in the previous quarter, lows last seen during the height of the pandemic.

For the quarter, household spending, which accounts for half of GDP, actually fell by 0.2% as growth slowed as people cut back on overseas travel.

The savings rate remained low at 0.6%.

The decline was largely engineered by the Reserve Bank of Australia (RBA), which raised interest rates to a 12-year high of 4.35% in an effort to ease demand and price pressures.

Measures of prices in the GDP ratio were also at a high level, with domestic demand inflation at 4.2% for the year.

All that inflation was a boon for nominal GDP, which rose 4.4% in the year to June. However, excluding the effects of inflation, GDP per capita fell 0.4% in the quarter, the sixth straight quarter of declines.

Productivity – the measure of output per hour worked – fell 0.8% in the quarter.