The March quarter national accounts are due for release on 7 June, and economists suggest they could show that the economy contracted in that period.
NAB economist Taylor Nugent says its calculations indicate that net exports are likely to subtract about one percentage point from GDP.
“On our calculations, net exports look set to subtract about 1 percentage point from GDP, though recent large swings in commodity prices do add uncertainty”, Nugent said.
“Even though net exports are likely to make a sizeable subtraction to March quarter GDP, the lift in import volumes, particularly autos, are likely to provide some offset through consumption, business investment or inventory build in certain sectors”.
Commonwealth Bank economist Harry Ottley warned the March national accounts faced “significant headwinds” when combined with the decline in consumer spending.
According to data released by the Australian Bureau of Statistics on Wednesday, retail turnover was unchanged in the first three months of the year, following a 0.4% increase in the month of March.
Given that retail product prices would have increased in the March quarter, the fact that total sales did not grow means actual retail volumes fell, which will subtract from GDP.
Regardless, RBA governor Phil Lowe forecasted a per capita recession for Australia in his monetary policy statement on Tuesday, with GDP expected to rise by 1.25% this year and about 2% by mid-2025.
Due to high immigration, Australia’s population will increase by at least 2% this year, implying that the economy will contract in per capita terms.
Extreme immigration-fueled population growth has been the main driver of Australia’s GDP growth for more than a decade.
It is also the primary reason why Australia remained ‘recession-free’ for so long prior to the pandemic, despite experiencing regular per capita declines in GDP:
The extreme immigration policy of the Albanese government may prevent the country from going into a technical recession.
However, Australians’ share of the economic pie will undoubtedly shrink, and for many it will feel like a recession.
