‘Slowest Annual Growth Since COVID-19’: Australian Economy Grows 1.5 Percent in a Year

A woman shops in an Aldi supermarket in Albany, Western Australia, on Feb. 1, 2024. Susan Mortimer/The Epoch Times

The nation’s economy grew just over 1.5 percent in the 2023 year, statistics from the Australian Bureau of Statistics (ABS) show.

Australia’s Gross Domestic Product (GDP) rose from $600.5 billion (US$396.47 billion) in December 2022 to $609.8 billion in December 2023.

The ABS described this movement as the “slowest annual growth rate since the COVID-19 pandemic.” The statistics show the economy grew 5.4 percent in 2021 and 2.4 percent in 2022, but fell 0.4 percent in 2020.

In the December quarter, Australia’s GDP lifted 0.2 percent from $608.3 billion to $609.8 billion, the ABS stats reveal.

Household spending increased just 0.1 percent in the December quarter, with a higher outlay in essential categories and less spending on discretionary items.

Head of ABS national accounts Katherine Keenan said growth was steady in December but slowed across each quarter in 2023

“Government spending and private business investment were the main drivers of GDP growth this quarter,” Ms. Keenan said.

Government spending jumped 0.6 percent in the December quarter, following on from a 1.5 percent boost in the September quarter.

“The growth in government expenditure was driven by government benefits for households, with more spending on medical products and services and higher employee expenses across commonwealth departments,” Ms. Keenan added.

“The referendum on an Aboriginal and Torres Strait Islander voice held during the quarter also contributed to the rise in employee expenses,”

However, defence spending dropped 3.5 percent during the December quarter. This followed a 4.8 percent rise in the September quarter, amid international training exercises.

Overall, national non-defence spending lifted 2 percent.

Private Investment Rises

Meanwhile, business investment rose 0.7 percent in the December quarter, spurred on by non-dwelling construction. This was the fourteenth consecutive boost to business investment. Data spending and new warehouse spending rose 5 percent.

However, new machinery and equipment fell for the first time since September 2022, by 1.3 percent, amid less spending on agricultural equipment.

“Investment on non-dwelling building construction in the private sector rose 5.0 percent. The key drivers of non-dwelling building construction were construction on data centres and warehouses,” Ms. Keenan said.

‘Continued Slowdown’: ANZ

In a research note responding to the figures, ANZ economists said Australia’s headline GDP points to a “continued slowdown in growth over the second half of 2023.”

“An upward revision to quarter three (now reported at 0.3 percent quarter on quarter versus the originally published 0.2 percent) saw yearly growth print at 1.5 percent year on year, in line with our forecast.

“Ultimately, there was noting in the national accounts release that changes our view on the RBA or the outlook for the economy.”

Household Spending ‘Subdued’: ABS

Australian households spent more on essential items in the December quarter, but they dropped expenditure on non-essential products such as accommodation.

Spending on accommodation and food services fell 3.2 percent, while people also spent 0.8 percent less on arts and recreation services.

However, spending on healthcare and social assistance lifted 0.5 percent, while electricity, gas, water, and waste services payments rose 0.9 percent.

“Households upped their spending on essential items like electricity, rent, food and health,” Ms. Keenan.

“Meanwhile they wound back spending in discretionary areas, including hotels, cafes, and restaurants, cigarettes and tobacco, new vehicle purchases, and clothing and footwear.”

Household consumption overall jumped just 0.1 percent during the quarter, after a fall of 0.2 percent in the previous quarter.

Spending on overseas travel fell 9 percent in the December quarter, with Australian residents pivoting to destinations closer to home like New Zealand and Indonesia.

Visitors to Australia, however, spent 1.2 percent more in the December quarter, higher than before COVID-19.

Imports Fall

Imports of goods and services dropped 3.4 percent in the December quarter, due to fewer imports of consumption and capital goods.

Goods and services exports also dropped 0.3 percent, with a 0.4 percent drop in exports of goods. However, service exports increased by 0.5 percent amid a rising number of incoming travellers and international students.

“Imports of consumption goods fell across the board, while imports of capital goods declined with falls in industrial equipment and imports of agricultural machinery in line with a smaller winter harvest. Imports of services declined as Australians spent less money overseas,” the ABS said.

“Exports of non-monetary gold drove the falls following strength in the September quarter. Exports of rural goods also fell as global demand for Australian grain softened. Non-rural goods offset the falls with rising international demand for coal and mineral ores.”

Wages Increase

Wages rose 1.4 percent in the December quarter and 8.4 percent since December 2022, according to the ABS. This was driven by public sector wage increases.

People walking down the busy Queen Street Mall in the Brisbane CBD in Queensland, Australia on March 29, 2021. Bradley Kanaris/Getty Images

Public sector wages rose 3.3 percent in the December quarter and 9.1 percent in a year, the highest growth since March 2011.

“The quarterly rise was driven by industrial reforms and new enterprise bargaining agreements following the lifting of wage caps across a number of states and territories,” the ABS said.

“Wages were also boosted by increased employment at some government agencies including the Australian Electoral Commission with the referendum on an Aboriginal and Torres Strait Islander voice taking place during the quarter,” the ABS said.

Job vacancies fell by 0.7 percent in the quarter, and the unemployment rate rose to 3.9 percent in the month of December.

Meanwhile, savings improved, with households saving 3.2 percent of their income in the December quarter.