Panic buying could mean Australia avoids recession

Yesterday’s record breaking preliminary retails sales data for March from the ABS, which surged 8.2% on the back of grocery hoarding (see next chart), has lifted hopes that Q1 GDP could record positive growth.

That’s the view of David Plank from ANZ , alongside other economists:

“A positive March quarter is not out of the question,” ANZ’s head of economics David Plank said…

“These retail figures all feed into GDP so on that basis the March quarter could well be positive, especially given mineral exports are still strong,” Market Economics economist Stephen Koukoulas said…

Citi economist Josh Williamson said the increase in spending in March was equivalent to the previous 42 months combined, but warned next month would be a record for the biggest fall in retail trade.

According to the ABS, retail sales comprise around 30% of household final consumption expenditure, which is the biggest driver of GDP:

Historically, Retail Trade estimates contributed 55-60% of HFCE in the expenditure side of Gross Domestic Product (GDP). However, this coverage of HFCE has fallen over time as household expenditure patterns have gradually shifted from goods to services. As a result, Retail Trade now contributes approximately 30% of quarterly estimates of HFCE.

It would be funny if Australia magically avoided a technical recession (two consecutive quarters of negative economic growth) due to only recording one massive GDP decline over the June quarter.

Australia’s long ‘recession-free’ run would continue, despite the economy going backwards in 2020 alongside massive unemployment and millions relying on welfare.

They don’t call us the ‘Lucky Country’ for nothing.