“The strong lift in GDP in the December quarter puts Australia on the international leader board in terms of economic performance in 2020,” Innes Willox, Chief Executive of the national employer association Ai Group, said today.
“The growth in GDP occurred despite a large reduction in fiscal stimulus in the quarter. For example, JobKeeper payments in the December quarter were one third of the level paid in the September quarter. (However, note that some of the previous stimulus payments received earlier were spent in the December quarter.)
“The fall in GDP of 1.1 per cent in 2020 compares very favourably with the Reserve Bank’s expectations of a fall of 6 percent in August, 4 percent in November and 2 percent in February.
“Approximately half of the December quarter lift in national GDP of 3.3 percent came from Victoria which recorded growth of 6.8 percent over the three months. This is in stark contrast to the previous quarter in which Victoria was the only state or territory to experience a fall in final demand (down by 1%).
“This points to the rebound element of GDP in the September and December quarters and this will be less of a driver in future GDP performance.
“The rebound element is also evident in investment.
“Total investment was up 3.6% in the quarter but down 0.9% for the year:
- Private sector investment was up 3.9% in the quarter including a rise of 8.9% in machinery and equipment (which was nevertheless 4.3% lower for the year) and a rise of 4.1% in dwellings in the quarter (but only up by 0.6% for the year).
- Public sector investment was up 2.5% for the quarter – with state and local government up 4.5% and national down 1%. Over 2020, Public sector investment was up 1.8%.
“With the rise in machinery and equipment investment encouraging, we are still well short of anything that can be called a recovery in business investment and most of the increase in the quarter is likely to have been postponed repairs and replacements,” Mr Willox said.