SYDNEY (Xinhua) – Australia has dipped into a per capita recession with new data yesterday showing that while the economy expanded over the December quarter, it was not enough to outpace the rate of population growth.
According to the Australian Bureau of Statistics’ (ABS) figures, the country’s economy grew 0.2 per cent in seasonally adjusted terms during the last three months of 2018, coming in below expectations of a 0.3 per cent rise.
With Australia’s population increasing at 0.4 per cent per quarter, the individual share of GDP per capita actually slid 0.2 per cent.
“The economy lost considerable momentum in 2018, slowing from around a 4.0 per cent annualised pace in the first half of the year to around a 1.0 per cent pace in the second,” Westpac Bank Chief Economist Bill Evans said.
“This was centred on housing and the consumer against the backdrop of a further tightening of lending standards and persistent weak wages growth. A negative supply shock from the drought in NSW and surrounds is another negative,” Evans said.
With the nation’s central bank forecasts on GDP now appearing “bleak”, according to Evans, he believes an interest rate cut could be on the agenda sometime in 2019.
“With the residential construction cycle now turning down, business investment mixed, the savings rate now edging up, and house prices and new lending contracting. The Reserve Bank of Australia is expected to cut the cash rate by 25 basis points to 1.25 per cent in August and follow that up with a second cut of 25 basis points in November, recognising confirmation of persistent below trend growth,” Evans said.