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Business Recorder
04-06-2025
- Business
- Business Recorder
Australian dollar out of gas as economy sputters
SYDNEY: The Australian and New Zealand dollars barely budged on Wednesday as domestic economic data again disappointed, adding to market wagers that interest rates will have to be cut again and perhaps soon. Figures showed Australia's economy grew just 0.2% in the first quarter, missing forecasts of 0.4% and well below the previous quarter's 0.6% increase. Analysts had already warned of downside risk after soft data early in the week, and there had even been talk the number could be negative, so the outcome was not a total shock. With growth short of the Reserve Bank of Australia's forecast of 0.5%, the central bank will likely have to again downgrade its economic outlook. The RBA has already responded by cutting rates in February and May, and even considered an outsized move in May as insurance against a tariff-induced global slowdown. 'While it's still too soon to know for sure, early signs point to an even larger drag from confidence on consumption and investment in Q2,' cautioned Ben Udy, lead economist for Oxford Economics Australia. 'The RBA will be watching closely for further signs that the weakness in activity extends into Q2 and, if that evidence continues to rack up, may opt to cut rates again in July, a little sooner than our current forecasts suggest.' Australia, NZ dollars back away from resistance, data a drag Markets imply an 80% chance the RBA will ease by another quarter point to 3.60% at its next meeting on July 8, though some analysts suspect it will instead choose to wait for first-quarter inflation figures due later in the month. Investors seemed relieved the GDP report was not even worse and the Aussie held at $0.6473, having fallen 0.5% the previous session and away from resistance around $0.6500. Support lies around $0.6447 and $0.6390. The kiwi dollar was a fraction firmer at $0.6006, after retreating 0.6% on Tuesday and off a six-month top at $0.6054. Support comes in around $0.5930 and $0.5850. The Reserve Bank of New Zealand cut its rates a quarter point to 3.25% just last week, and is far ahead of the RBA having eased by a hefty 225 basis points so far this cycle. Markets are thus wagering it will skip another cut at its July meeting and imply around a 70% chance of a move in August instead, which could be the last of the cycle.
Business Times
04-06-2025
- Business
- Business Times
Australian dollar out of gas as economy sputters
[SYDNEY] The Australian and New Zealand dollars barely budged on Wednesday as domestic economic data again disappointed, adding to market wagers that interest rates will have to be cut again and perhaps soon. Figures showed Australia's economy grew just 0.2 per cent in the first quarter, missing forecasts of 0.4 per cent and well below the previous quarter's 0.6 per cent increase. Analysts had already warned of downside risk after soft data early in the week, and there had even been talk the number could be negative, so the outcome was not a total shock. With growth short of the Reserve Bank of Australia's forecast of 0.5 per cent, the central bank will likely have to again downgrade its economic outlook. The RBA has already responded by cutting rates in February and May, and even considered an outsized move in May as insurance against a tariff-induced global slowdown. 'While it's still too soon to know for sure, early signs point to an even larger drag from confidence on consumption and investment in Q2,' cautioned Ben Udy, lead economist for Oxford Economics Australia. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'The RBA will be watching closely for further signs that the weakness in activity extends into Q2 and, if that evidence continues to rack up, may opt to cut rates again in July, a little sooner than our current forecasts suggest.' Markets imply an 80 per cent chance the RBA will ease by another quarter point to 3.60 per cent at its next meeting on July 8, though some analysts suspect it will instead choose to wait for first-quarter inflation figures due later in the month. Investors seemed relieved the GDP report was not even worse and the Aussie held at US$0.6473, having fallen 0.5 per cent the previous session and away from resistance around US$0.6500. Support lies around US$0.6447 and US$0.6390. The kiwi dollar was a fraction firmer at US$0.6006, after retreating 0.6 per cent on Tuesday and off a six-month top at US$0.6054. Support comes in around US$0.5930 and US$0.5850. The Reserve Bank of New Zealand cut its rates a quarter point to 3.25 per cent just last week, and is far ahead of the RBA having eased by a hefty 225 basis points so far this cycle. Markets are thus wagering it will skip another cut at its July meeting and imply around a 70 per cent chance of a move in August instead, which could be the last of the cycle. REUTERS
Straits Times
04-06-2025
- Business
- Straits Times
Australia's economy barely grows in first quarter as spending drops
SYDNEY - Australia's economy barely grew in the first quarter as consumers stayed stubbornly frugal and government spending, the engine of activity in 2024, sputtered to a standstill, underlining the need for more policy stimulus. Real gross domestic product (GDP) rose 0.2 per cent quarter on quarter in the three months to March, Australian Bureau of Statistics (ABS) data showed on June 4, missing market forecasts of 0.4 per cent. Year-on-year growth flatlined at 1.3 per cent, when analysts had looked for a pick-up to 1.5 per cent, and remained well short of the 2.5 per cent pace that used to be considered 'normal'. The Reserve Bank of Australia has already cut interest rates twice since February to 3.85 per cent and the minutes of the May policy meeting showed that it was open to an outsized half-point move as US tariffs darkened the outlook for the global economy. 'While it's still too soon to know for sure, early signs point to an even larger drag from confidence on consumption and investment in Q2,' said Ben Udy, lead economist for Oxford Economics Australia. 'The RBA will be watching closely for further signs that the weakness in activity in Q1 extends into Q2 – if that evidence continues to rack up, the RBA may opt to cut rates again in July.' Swaps imply an 80 per cent probability of a rate cut in July, with a total easing of almost 100 bps priced in to a bottom of 2.85 per cent by early next year. 'Extreme weather events reduced domestic final demand and exports. Weather impacts were particularly evident in mining, tourism and shipping,' said Katherine Keenan, ABS head of national accounts. The report showed the household savings ratio jumped to 5.2 per cent, the highest since third quarter 2022, as consumers chose to save rather than spend. That is partly why household consumption edged up a tepid 0.4 per cent in the quarter, adding just 0.2 percentage points to GDP growth despite lower borrowing costs and cooling inflation. In particular, government spending, which has single-handedly lifted economic growth over the past year, has disappointed to make the largest drag on growth since 2017. Measures of inflation in the report showed a continued moderation with the deflator for domestic demand slowing to an annual 3.3 per cent from 3.5 per cent in the fourth quarter. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
News.com.au
04-06-2025
- Business
- News.com.au
Australia could be in a per capita recession if GDP slumps significantly, economists warn
Top economists fear Australia could return to a per capita recession when the March quarterly figures are released on Wednesday. The nation was in a per capita recession – where population growth alone kept Australia out of an official recession – for seven straight quarters before economic activity picked up again in December. Growth is tipped to sink again in the March quarter, ahead of the ABS releasing the official data at 11.30am. Oxford Economics Australia lead economist Ben Udy told NewsWire previous partials released, including retail spending and current account balance, painted a worrying picture ahead of the full picture being revealed. 'It could push us back into a per capita recession, but it is not something I would worry about too heavily,' he said. 'The economy is just stalling and will pick up in the months ahead.' Mr Udy is currently forecasting quarterly growth of around 0.1 to 0.2 per cent when the numbers are released. Independent economist Saul Eslake agreed, telling NewsWire he no longer makes his own assessment of these figures, but based on current market forecasts, Australia could slide back into the negatives. 'The market has been forecasting [a quarterly forecast of] 0.4 per cent. 'You had a minus 0.1 from net exports but had a plus 0.1 from net inventories, so that is a wash. 'We know business investment was soft in the March quarter, it could be a tad less than 0.4'. 'If it is, that might show up as another quarter of negative per capita growth because we had seven in a row and then had an eighth that was positive.' Mr Udy also pointed to other key data from the ABS, including government consumption, retail sales and trade, all showing weak partial data prints. But he said these were driven by a number of one-off factors, including higher interest rates, low levels of consumer confidence and ex-tropical cyclone Alfred in Queensland disrupting economic activity. 'Importantly a number of these factors have been in play for a while but have been offset by strong growth in the public sector which waned in Q1,' he said. The economist said if Wednesday's figures show a per capita recession, the economy would likely snap out of it quickly, albeit starting from a low point. 'If GDP per capita was to decline in the first quarter, we would expect it to pick up pretty quickly in the months ahead,' he said.
Sky News AU
03-06-2025
- Business
- Sky News AU
GDP to ‘fall again' in March quarter economists, banks warn after Australia broke 21 month long per capita recession
Australia could be heading back into per capita recession territory as many leading economists downgrade their gross domestic product projections. The nation was in a per capita recession - consecutive quarters where population growth outpaced economic growth - for 21 months before the economy picked up in the December 2024 quarter. Growth is expected to sink once again in the March quarter in the new figures from the Australian Bureau of Statistics due 11.30am. Oxford Economics Australia lead economist Ben Udy said the consultancy firm had downgraded its GDP projection from 0.5 per cent to about 0.2 per cent after it was revealed Aussies were spending less than expected. Mr Udy also pointed to other key data from the ABS, including government consumption, retail sales and trade, which suggested Australia could be headed back towards a per capita recession territory. 'There's no question that on a per capita basis, the activity is pretty soft at the moment,' he told He added Australia was already experiencing a hit from a reduction of international students - one of the nation's major exports. 'One thing in today's trade balance of payments data was that exports of services were a little lower,' Mr Udy said. 'In particular, exports of education services suggesting reductions in student numbers may already be starting to have an effect on Australia's exports.' It comes as student placement and English language testing business IDP Education suffered a devastating 48 per cent share price drop on Tuesday after the company forecasted its earnings would halve. The nation's GDP slump was also a concern for Economics Unchained's principal Stephen Halmarick, who warned Australia's economy was headed back into per capita recession territory. 'It looks like the first quarter of GDP numbers are going to be pretty soft, maybe around 0.2-0.3 per cent for the quarter,' he told Sky News Business Now. 'That's slower than the fourth quarter of last year, which was 0.6 per cent. This very subdued economic environment that we've had for a number of years now (continues). 'Perhaps more importantly, the GDP per capita number is likely to fall again. 'We've seen this big decline in GDP per capita over the last two or so years. So (we're seeing) an environment where economic growth continues to be pretty modest.' Meanwhile, the Commonwealth Bank of Australia downgraded its forecast from 0.4 per cent quarterly growth to 0.3 per cent for March. 'With population rising by 0.4 per cent (during the quarter), that indicates a soft start to 2025 after the relative strength seen at the end of last year,' a CBA report read. Westpac predicts just 0.1 per cent quarterly growth in March, while the Organisation for Economic Co-operation and Development downgraded Australia's 2025 growth from 1.9 per cent to 1.8 per cent. Judo Bank's chief economist Warren Hogan also predicted Aussies will see the economy has slumped in March. 'We're going to get a picture painted of a soft domestic economy,' Mr Hogan said on Tuesday. 'Consumer spending (has been) soft, business investment (has been) soft even the numbers today on government spending investment and consumption were soft.' Australia experienced the slowest annual growth outside of the pandemic since the early 1990s recession in September when the economy grew 0.8 per cent.
