Felicity Emmett, analyst at ANZ, notes that Australian economy grew just 0.5% quarterly in Q2, while yearly growth continued to slow and is now down to 1.4%, its slowest step since 2009 in the midst of the global financial crisis.
“The detail of the report shows that the public sector is punching above its weight, contributing 1.3% to the 1.4% growth over the past year. Private sector request was flat in the quarter and down 0.4% over the past year.”
“Q2 is likely to be the low point in the cycle, with the encouragement in the form of tax cuts and rate cuts helping to support stronger outcomes in H2. The reality is, however, that the underlying rate in the economy remains very soft, and further support from monetary policy is likely to be required in time.”
“The result will be a regret for the RBA, which had forecast 1.7% for the quarter just a month ago, and suggests that another round of growth downgrades is likely in the Bank’s November Statement on Monetary Policy.”