As widely expected by markets, the national economy slowed in the first three months of the 2017. National Accounts data released today indicate that Australia’s Gross Domestic Product (GDP) rose by 0.3 per cent in real seasonally adjusted terms in the March quarter 207, following a 1.1 per cent rise in the December quarter.
GDP growth was weighed down by reductions in exports (-0.4 percentage point contribution to GDP growth) and housing investment (-0.3 percentage points). The fall in exports may in part reflect temporary factors associated with the disruption to mining exports caused by Cyclone Debbie which hit at the end of the quarter. In terms of other major components of GDP, household consumption grew at a modest pace, while business investment recorded a small rise following 10 consecutive quarterly falls.
The ABS does not produce GDP estimates at the state level on a quarterly basis, but it does provide estimates of state final demand (SFD) which represents a measure of aggregate demand within an economy (i.e. consumption plus investment). The most notable economic activities excluded from final demand are international and interstate trade.
South Australian final demand rose by 1.4 per cent in real seasonally adjusted terms in the March quarter 2017. This is a healthy result in both historical and relative terms. The corresponding national aggregate rose by just 0.3 per cent.
The rise in final demand was somewhat narrowly based, reflecting a large rise in business investment which contributed 1.0 percentage points to overall SFD growth. Household consumption made a modest contribution to SFD growth (0.3 percentage points), while housing investment was slightly lower. Meanwhile, public sector demand was flat, with a fall in public investment offsetting an increase in consumption.
The SA Centre for Economic Studies will provide a more in-depth analysis of recent economic developments in South Australia and Australia as part of our next Economic Briefing Report, which will be released to Corporate Members toward the end of this month.