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Australia saw stronger than expected GDP for the second quarter at +0.7% q/q higher than expected 0.5% q/q but down from  prior 1.8%. Year on year record high +9.6% growth higher than  expected 9.2% y/y and prior 1.1% with the base effect.

Australian Power Use

With the current lockdown in many states from the Delta Variant in Australia Q2 was q/q was being looked as relevant to avoid a double-dip recession.  Q3 will record a contraction in growth. With Q2 GDP +0.7% q/q the generally accepted definition of a recession is two consecutive quarters of contracting GDP has been avoided

This was the weakest pace of expansion in four quarters as the full impact of the ongoing COVID-19 delta variants lockdowns is only just filtering throught. Household consumption continued to grow, government spending rebounded, while net external demand contributed negatively amid a drop in export volumes with both the variant affect and trade war wih China.

Australia Q2 21 GDP Contribution

Australian Q2 GDP Highlights

  • Q2  +0.7% q/q expected 0.5% q/q, prior 1.8%
  • Q2 +9.6% y/y expected  9.2% y/y , prior 1.1% +9.6% y/y and is a record high result because the pandemic caused a severe contraction in Q2 2020, which was dropping from the calculation (the base effect)
  • Household consumption continued to grow (1.1% vs 1.3% in Q1), driven by spending on services
  • Government spending rebounded (1.3% vs -0.3%), led by health-related expenditure.
  • Private investment eased sharply (2% vs 6.2%), on a slowdown in machinery and equipment investment and dwellings investment.
  • Net external demand contributed negatively to the GDP, due to falls in export volumes of mining commodities which reflected disruptions to both coal production and transportation of iron ore to ports.

Australia Q2 21 GDP Growth Value Added

The result is aligned with the RBA. The central bank noted at their last meeting that in the past once virus outbreaks are contained, the economy bounces back quickly. The RBA as expected then said no change to their QE tapering stance and to purchase bonds at A$5 billion per week until early September. 

Source: ABS

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From a Sunburnt Country

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