Economic growth beats expectations, profits outpace wages

Australia’s economic growth beat analysts’ forecasts in the first few months of the year, but there is evidence that the benefits are being felt more by business owners than workers.

Australia’s economy grew 0.8% in the March quarter and 3.3% over the past year, according to Australian Bureau of Statistics National Accounts data.

Economists polled by Reuters generally expected quarterly growth of 0.5% and 2.9% in the year to March 31.

The main contributors to the better than expected result are:

  • a rise in inventory as businesses restocked following supply chain disruptions (+1 percentage point)
  • household consumption (+0.8 percentage point)
  • public expenditure (+0.6 percentage point).

The biggest drag on the economy has been an increase in imports – which subtracted 1.7 percentage points from GDP – as some COVID-related supply bottlenecks eased and businesses recovered. are replenished.

The ABS noted that the first three months of this year saw the largest increase in imports since the December 2009 quarter.

“Consumers happy to go out and spend”

Increased government spending was largely driven by healthcare costs as the Omicron wave of COVID-19 hit Australia hard.

But, despite the disruption caused by both Omicron and severe weather in eastern Australia, travel, leisure and restaurants led the 1.5% rise in household spending.

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