December 2024 quarter marks end of long running per-capita recession: ABS
GDP grew 0.6 per cent in the December quarter, supported by a rise in the export of goods and services, while per capita GDP rose for the first time in two years.
GDP per capita increased by 0.1 per cent last quarter, following seven consecutive quarters of falls. This marks the end of the longest period of economic decline per capita, based on figures from the Australian Bureau of Statistics (ABS) dating back to 1973.
“Today’s GDP figures reveal that the low point of Australia’s economic cycle has now passed, with some green shoots appearing,” Stephen Smith, partner at Deloitte Access Economics, said.
“The data also confirms that Australia has narrowly avoided eight consecutive quarters in a per capita recession, following a 0.1% increase in GDP per capita in the December quarter.”
The headline GDP result slightly beat major banks’ predictions, which forecast a GDP rise of 0.5 per cent over the December quarter.
However, Australia’s economic growth remains sluggish in relation to historical trends.
“The data shows that the Australian economy grew by just 1.0% during the 2024 calendar year. Excluding the pandemic, this is the slowest pace of economic growth since 1991,” said Smith.
Household spending grew by 0.4 per cent in the December quarter. Spending on essentials such as rent and health continued to be a high contributor to growth. Discretionary spending also saw a boost last quarter.
“Household discretionary spending rose as people made the most of retail sales events and increased spending on hospitality as they enjoyed music and sporting events,” Katherine Keenan, head of national accounts for the ABS, said.
Private investment grew by 0.3 per cent, driven by mining investment and the construction of electricity generation and distribution projects. Private dwelling investment fell 0.4 per cent as price pressures weighed on work pipelines.
Net trade also contributed to GDP growth. Exports of travel services increased as overseas travellers benefited from the depreciation of the Australian dollar, and travel imports fell as Australians opted for shorter, cheaper holidays.
The household savings to income ratio rose from 3.6 per cent to 3.8 per cent.
Government spending growth moderated to 0.7 per cent in the December quarter, driven by essential services including health, education and policing.
Public investment rose by 1.8 per cent, driven by state and territory government spending on public transport, roads, water and renewable electricity infrastructure.
“This firming outlook represents the economy kicking into gear rather than firing on all cylinders. Alongside migration, growth in 2024 was propped up by government spending, which is still running at a near record share of GDP,” Smith added.
“Unless more is done to encourage private sector growth and investment, there’s limited upside to the economic turnaround, particularly given the global economic environment appears to be darkening. With an election imminent, this should be front of mind for all policy makers.”
