Australia’s economy showed notable growth in the third quarter of 2023, although it fell short of analysts’ forecasts. The country’s Gross Domestic Product (GDP) expanded by 2.1% year-on-year, marking the fastest growth rate seen in nearly two years, according to data released by the Australian Bureau of Statistics. However, this growth did not meet economists’ predictions of 2.2%. On a quarterly basis, GDP rose by 0.4%, which was below the anticipated 0.7%.
Despite the miss in expectations, Harry Murphy Cruise, head of economic research and global trade at Oxford Economics, emphasized that this discrepancy does not reflect a weaker economy. Excluding fluctuations in inventories and trade, domestic economic activity surged by 1.2% from the previous quarter, the highest growth in over two years. Sunny Nguyen, head of Australia economics at Moody’s Analytics, echoed this sentiment, attributing the lower-than-expected GDP figures to businesses adjusting their inventories more aggressively. “These accounting changes speak more to timing than to underlying demand,” Nguyen stated.
Domestic final demand played a crucial role in the growth, contributing 1.1 percentage points. Private investment surged to its highest level since March 2021, as companies invested significantly in machinery, equipment, and major data centers, particularly in New South Wales and Victoria. Household consumption also demonstrated resilience, propelled by increases in spending on insurance, utilities, housing, healthcare, and food.
Conversely, net trade proved challenging for the economy, pulling growth down by 0.1 percentage points, as the surge in imports outstripped that of exports in the three months leading to September. Before the GDP figures were released, Reserve Bank of Australia Governor Michele Bullock cautioned that the economy may have reached its growth potential amid persistent inflationary pressures. The inflation rate reached 3.8% year-on-year in October, marking its fastest growth in seven months and exceeding the RBA’s target range of 2% to 3%.
In its monetary policy meeting, the RBA maintained interest rates at 3.6% while monitoring inflation, citing the robust economic landscape and a tightening labor market as reasons for caution against further easing. “The Q3 data confirms that the economy is still too hot for the RBA’s liking,” said Cruise, noting that interest rate cuts are unlikely in the near future, and an increase may be considered to curb inflation.
Following the data release, the yield on Australia’s 10-year government bonds rose by 4 basis points to 4.650, reflecting an increase of 55 basis points since mid-October. Bullock previously indicated that the current cycle of rate cuts may be nearing an end, with inflation expected to remain above the RBA’s target until the second half of 2024. As the RBA’s board prepares to meet next week, a continuation of the 3.6% interest rate is widely anticipated.
In the second quarter of 2023, Australia’s economy had already expanded by 1.8% year-on-year, up from 1.3% in the preceding quarter, driven by strong domestic spending, including household and government consumption. This steadfast performance reflects the resilience of the Australian economy amidst varying pressures.
Original Source: https://www.cnbc.com/2025/12/03/australia-q3-gdp-september.html
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Publish Date: 2025-12-03 08:14:00
