Economic activity in the country continues to weaken as the year progresses, with gross domestic product (GDP) growth during the fourth quarter (Q4) last year slowing down to 0.2 per cent from 0.3 per cent in Q3.
Australia’s economic outlook is positive, although 2024 is expected to be weaker, according to KPMG, which expects 2025 to be better for the country, but growth is likely to remain below the long-term trend.
Economic activity in the country continues to weaken as the year progresses.
KPMG expects the unemployment rate to gradually rise through the year.
The largest contribution to that growth can be attributed to the pullback in imports, which itself is a further indicator of economic weakness, KPMG notes in an insight piece on its website.
With extraordinary levels of population growth, real GDP on a per capita basis has fallen for three consecutive quarters and is now 1 per cent lower than where it was a year ago.
The ratio of government spending to GDP is nearly 27 per cent, compared to the 22-23 per cent during pre-COVID times.
KPMG expects the unemployment rate to gradually rise through the year. Contractions of gross value added (GVA) were observed in Q4 last year in seven out of 19 industries.
Industries more dependent on household discretionary spending, such as retail trade, are expected to experience subdued growth in 2024 as households tighten their belts, KPMG observed.
Business conditions have been on a downward trend for both retail and wholesale trade over recent months.
Real investment dropped by 0.2 per cent quarter on quarter (QoQ) in Q4 2023, driven by decreases in both private investment and government investment.
Net trade contributed 0.6 percentage points to real GDP growth in Q4 2023, after detracting by 0.6 percentage points from real GDP in Q3 2023, with a 3.1 per cent QoQ fall in imports and a 0.3 per cent QoQ fall in exports.
Exports of goods and services fell by 0.3 per cent QoQ, driven by a fall in exports of goods. Goods exports fell by 0.3 per cent as the global demand for Australian commodities continued to weaken.
The seasonally-adjusted unemployment rate increased slightly to 3.8 per cent in March this year from 3.7 per cent in February.
Fibre2Fashion News Desk (DS)