Powered by MOMENTUM MEDIA
subscribe to our newsletter

GDP figures confirm economic recovery

Australia’s GDP grew by 3.1 per cent during the December quarter, beating market expectations of a 2.5 per cent increase, official figures show. 

The Australian Bureau of Statistics (ABS) has released gross domestic product (GDP) figures for the three months to December 2020, showing that the economy recovered by 3.1 per cent in the second quarter of the financial year.

This follows on from the 3.3 per cent rise in the previous quarter, marking the first time in the 60-year history of the National Accounts that GDP has grown by more than 3.0 per cent in two consecutive quarters, according to the ABS.

The economic recovery was largely driven by household spending, which was up by 4.3 per cent, with pre-Christmas sales and Victoria emerging from lockdown strongly contributing to the growth in spending. 

However, despite the rapid recovery, Australia’s economic activity remains 1.1 per cent lower than December 2019 figures, as the country continues to recover from the impacts of the COVID-19 induced recession.

Advertisement
Advertisement

“Despite growing at 10.4 per cent for the quarter, household spending in Victoria was 7.2 per cent below its pre-COVID level. Household spending for the rest of Australia, excluding Victoria, was 1.1 per cent lower than pre-COVID levels,” head of national accounts at the ABS, Michael Smedes, said.

Private investment rose 3.9 per cent and contributed 0.7 percentage points to growth. 

Favourable weather conditions contributed to a strong increase in agricultural production, which was reflected in a 26.8 per cent increase in agriculture, forestry and fishing gross value added.

The ABS noted that there were “flow-on positive impacts” to other industries along the supply chain, including wholesale trade and transport, postal and warehousing, which rose 3.6 per cent and 6.1 per cent, respectively.

There were rises across both housing and business investment with improved conditions, which coincided with government initiatives, such as HomeBuilder and the expanded instant asset write-off.

PROMOTED CONTENT


Compensation of employees rose 1.5 per cent as employment and hours worked increased with underlying activity in the economy. 

Treasurer Josh Frydenberg said the national accounts were proof the government’s economic plan was working.

“This is a very encouraging performance from the Australian economy considering the abyss we were staring into at the start of the pandemic.

“Our economy outperformed all other advanced economies in 2020,” he said.

Mr Frydenberg added that, as the government’s support continues to taper off, private investment is stepping up.

“With business and consumer confidence back to pre-pandemic levels, the savings ratio fell from 18 per cent to 12 per cent. 

“While still three times higher than its pre-pandemic levels, consumption will continue to support the Australian economy,” he said. 

Mr Frydenberg said the Australian economy had also started 2021 in a strong position. 

“The job is not done, there are challenges ahead, but you wouldn’t want to be in any other country other than Australia as you begin 2021,” he concluded. 

[Related: Australia no longer in recession]

GDP figures confirm economic recovery
GDP figures confirm economic recovery
mortgagebusiness

Reporter

If you have any news, ideas or enquiries for Mortgage Business - please contact This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Latest News

Lenders have begun offering disaster relief packages for customers impacted by Tropical Cyclone Seroja in Western Australia. ...

Boutique lender Apickle has launched new finance product for SMEs using eftpos that enable them to borrow up to $200,000 without an asset se...

The federal government said it is pleased that higher confidence levels have led to a strong housing market but said that it is “keeping a...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Tackling the home deposit challenge

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.