The Australian Gross Domestic Product fell 0.3 per cent in seasonally adjusted, chain volume terms in the March quarter 2020 and growth slowed to 1.4 per cent through the year, according to figures released by the Australian Bureau of Statistics (ABS) today.
Chief Economist for the ABS, Bruce Hockman, said: “This was the slowest through-the-year growth since September 2009 when Australia was in the midst of the Global Financial Crisis and captures just the beginning of the expected economic effects of COVID-19.”
The Australian economy was impacted by a number of significant events this quarter, starting with bushfires and other natural disasters, followed by the outbreak of COVID-19 and the subsequent imposition of restrictions. The government responded with the introduction of economic stimulus and support packages. The ABS has published a series of spotlight articles highlighting some areas in the economy where these events had more significant impacts.
Public demand contributed 0.3 percentage points to GDP, driven by a 1.8 per cent rise in government final consumption expenditure.
"Government spending at all levels increased in response to the bushfires and the management of the COVID-19 pandemic."
Private demand detracted 0.8 percentage points from GDP, driven primarily by a 1.1 per cent fall in household final consumption expenditure. Spending on services fell significantly, particularly where restrictions impacted most severely, such as air transport services, hotels, cafes and restaurants, recreation and culture. Spending on goods rose, most notably in food and pharmaceuticals, as households prepared for the introduction of restrictions.
Net Trade contributed 0.5 percentage points to GDP. Imports of goods fell 3.9 per cent, with falls in consumption and capital goods reflecting weak domestic demand. Imports of services fell 13.6 per cent, with travel services falling sharply in response to the global outbreak of COVID-19 and associated travel bans. Exports of services declined 12.8 per cent, with restrictions on overseas arrivals reducing education related travel and tourism in Australia.
The household saving to income ratio rose to 5.5 per cent, reflecting a rise in gross disposable income and falls in consumption. Gross disposable income was driven by a 6.2 per cent increase in social assistance benefits due to both an increase in the number of recipients and the introduction of new government support packages in response to COVID-19 and bushfires.
New South Wales -1.5%
Total final consumption expenditure decreased 0.8%, due to a:
- 1.6% fall in household consumption reflecting decreased expenditure on transport services, hotels, cafes and restaurants, and clothing and footwear partly offset by an increase in food and alcoholic beverages
- but partly offset by a 1.8% increase in government consumption reflecting increased expenditure in response to the bushfires and COVID-19 pandemic
Private gross fixed capital formation decreased 3.5%, driven by a:
- 11.4% fall in new building construction following project completions, and subdued work on recently commenced projects
- 12.0% fall in new engineering construction due to reduced work on major road projects
- 4.5% fall in dwelling investment reflecting continued weakness in dwelling approvals
Public gross fixed capital formation decreased 4.8%, driven by a:
- 4.4% fall in general government investment across all levels of government
- 6.0% fall in public corporations reflecting reduced investment in telecommunications and transport
Victoria -0.1%
Private gross fixed capital formation decreased 1.1%, driven by a:
- 4.8% fall in machinery and equipment reflecting aircraft and office equipment purchases last quarter
- 1.2% fall in dwellings reflecting continued weakness in approvals
Household final consumption expenditure decreased 1.2%, driven by a:
- 11.2% fall in clothing and footwear
- 8.4% fall in hotels, cafes and restaurants due to lockdown related to COVID-19 and bushfires
Public gross fixed capital formation increased 3.4%, driven by a:
- 5.9% rise in state and local general government reflecting ongoing investment in road infrastructure
- 2.7% rise in state and local public non-financial corporations reflecting increased investment in sewerage infrastructure
Government final consumption expenditure increased 3.3%, driven by a:
- 4.4% rise in state and local with spending on bushfire recovery and vocational education expenses
- 1.8% increase in national non-defence consumption expenditure reflecting a decrease in sales of education services
Queensland -0.3%
Total final consumption expenditure decreased 0.2% due to a:
- 0.5% fall in household consumption expenditure with decline in spending on services and partly offset by an increase in food
- 0.5% rise in government consumption expenditure driven by increased Commonwealth spending in response to bushfires and the COVID-19 pandemic
Public gross fixed capital formation decreased 2.5%, driven by a:
- 3.1% decrease in general government investment in buildings and state and local investment in infrastructure
Private gross fixed capital formation decreased 0.1%, due to a:
- 4.4% fall in non-dwelling construction reflecting reduced investment in engineering construction and subdued new building commencements
- Partly offset by a +3.2% rise in purchases of machinery and equipment
- 2.2% rise in dwelling construction with increased spending on alterations and additions due to repair works related to hailstorms on the Sunshine Coast
South Australia -1.0%
Household final consumption expenditure decreased 1.5%, driven by a:
- 10.1% fall in hotels, cafes and restaurants with falls across all components reflecting the impacts of COVID-19 on the industry
Private gross fixed capital formation decreased 2.3%, driven by a:
- 14.1% fall in machinery and equipment with reduced purchases of trucks, aircrafts and other machinery
- 1.8% fall in dwellings reflecting less work done on alterations and additions
Public gross fixed capital formation decreased 0.6%, driven by a:
- 12.5% fall in commonwealth public non-financial corporations
- 41.0% fall in state and local general government reflecting an asset sale which occurred last quarter. Without the impact of this sale, general government investment in new assets rose
Government final consumption expenditure increased 0.9%, driven by a:
- 2.2% increase in state and local government in response to bushfires and subsequent local tourism campaigns to aid recovery
Western Australia 0.9%
Private gross fixed capital formation increased 5.2%, due to a:
- 14.6% rise in non-dwelling construction reflecting increased mining investment
Partly offset by a: - 4.7% fall in dwelling construction led by a fall in alterations and additions
Public gross fixed capital formation increased 6.8%, driven by a:
- 26.3% rise in state and local public non-financial corporations driven by vehicle purchases and investment in rail infrastructure6.4% rise in state and local general government
Total final consumption expenditure decreased 0.7%, driven by a:
- 1.0% decrease in household consumption reflecting falls in hotels, cafes and restaurants, transport services, and clothing and footwear
- 0.1% decrease in government consumption due to a 0.4% fall in state and local government consumption
Tasmania increased 0.6%
Private gross fixed capital formation increased 5.4%, driven by a:
- 24.8% increase in machinery and equipment reflecting purchases of buses and trucks
- 7.2% increase in dwelling investment reflecting continued demand for houses
Public gross fixed capital formation increased 6.6%, driven by a:
- 18.1% rise in state and local public non-financial corporations reflecting increased investment in utilities
- 7.1% rise in national general government reflecting increased investment in machinery and equipment
Government final consumption expenditure increased 0.2%, driven by a:
- 1.0% increase in national non-defence reflecting additional commonwealth spending on COVID-19 and bushfire responses
Household final consumption expenditure decreased 0.9%, driven by a:
- 7.6% fall in hotels, cafes and restaurants reflecting lockdown related to COVID-19
Northern Territory -1.2%
Private gross fixed capital formation decreased 7.9%, driven by a:
- 20.1% fall in intellectual property products reflecting decreased petroleum exploration9.0% fall in non-dwelling construction reflecting reduced mining investment
- 11.4% fall in machinery and equipment
Public gross fixed capital formation decreased 1.6%, driven by a:
- 16.4% fall in state and local public corporations
Total final consumption expenditure was flat, due to a:
- 0.9% rise in government consumption expenditure reflecting increased spending by Commonwealth and state and local governments
Offset by a: - 0.6% fall in household consumption expenditure driven by reduced spending on hotels, cafes and restaurants
Australian Capital Territory 2.1%
Government final consumption expenditure increased 4.5%, driven by a:
- 4.5% increase in national non-defence consumption expenditure reflecting additional commonwealth spending on bushfire and COVID-19 responses
- 5.0% increase in state and local reflecting increased transport and bushfire related spending
Household final consumption expenditure increased 0.5%, driven by a:
- 53.4% rise in purchase of vehicles reflecting increased demand following a significant hail storm
- 4.8% rise in food as households prepared for lockdown measures
Public gross fixed capital formation increased 1.0%, driven by a:
- 31.3% rise in state and local public non-financial corporations investment in water infrastructure
Private gross fixed capital formation decreased 1.7%, driven by a:
- 25.6% fall in machinery and equipment after extensive purchases of computer equipment in December quarter 2019
Partly offset by a: - 6.7% increase in non-dwelling construction reflecting increased investment in offices and telecommunications infrastructure
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