Lee Sue Ann, Economist at UOB Group, reviews the latest GDP releases in Australia.

Key Takeaways

“The Australian economy grew 0.9% q/q in 2Q22, within expectations, and slightly higher from a revised 0.7% q/q reading in 1Q22 (0.8% q/q previously). From a year earlier, the economy expanded by 3.6% y/y, slightly higher than an estimated 3.4% y/y increase, and also higher from last quarter’s reading of 3.3% y/y.”

“The latest GDP prints continue to paint an overall positive backdrop for the Australian economy, following a rough start to the year. Our view remains for economic growth to turn softer towards 4Q22 as high inflation and rapid increases in interest rates weigh on households alongside a slowdown in global growth. We are keeping our GDP forecasts of 3.9% and 2.8% for 2022 and 2023, respectively.”

“We look for further tightening in the labour market in the next couple of months before slowing growth will likely push the jobless rate higher back towards the 3.8%-4.0% levels. Inflation remains a key risk, though we see it peaking in 4Q22, in the absence of further significant global shocks, Our full-year 2022 inflation forecast of 5.0% remains unchanged.”