Australia on brink of another 'household recession' with figures falling behind forecast

ABC NEWS (Australia)

The latest snapshot of the Australian economy isn't painting a very rosy picture. Current GDP figures show growth is weak and falling behind both economist expectations and reserve bank forecasts. And that's strengthening the case for further interest rate cuts.

Transcript

00:00For Vince Perry's carpet and tiles business, times are challenging.

00:06There is a lack of money out there.

00:08There's no money to spend.

00:10Whoever has money is not spending money.

00:12And that's showing up in the official figures,

00:15with Australia on the cusp of another household recession,

00:18where the amount of money spent per person is going backwards.

00:22Well, it does demonstrate that the recovery that we've seen

00:25through the second half of last year and into this year

00:28is pretty sluggish.

00:30Australia's economy barely grew in the March quarter,

00:33up 0.2%, and 1.3% for the year.

00:38It was boosted by household spending on essentials like electricity and gas.

00:42Private sector investment rose, led by housing construction,

00:46mining and manufacturing.

00:48However, the result was dragged down by the biggest pullback

00:51in government spending since 2017.

00:54Australians are also deciding to save more of their money,

00:57driving up the household savings ratio.

01:00With all of the uncertainty in the world,

01:03any growth is a decent outcome.

01:06Donald Trump's on and off again tariffs are driving that uncertainty,

01:10which could lead to more interest rate cuts.

01:13I'm forecasting three more rate cuts before the end of this year,

01:16and part of that is the pessimism that I have on the global economy

01:20with US tariff policy.

01:22There are storm clouds ahead for the Australian economy,

01:25so money markets are predicting a more than 80% chance

01:28of the Reserve Bank cutting interest rates at its next meeting in July.

01:31But if that doesn't end up happening,

01:33a rate cut in August is seen as almost certain,

01:36in order to insulate the economy from the worst of the potential Trump tariff shock.

01:41So, let's look.

01:42Let's look.

01:43Let's look.

01:44Let's look.

01:45Let's look.

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