Felicity Emmett, senior economist at ANZ, notes that the Australian economy grew just 0.4% q/q in Q3, below both ANZ’s and market expectations.

Key Quotes

“Q2 growth was revised a touch higher, and annual growth came in at 1.7%, just up from the 1.6% recorded in Q2, but still well below trend. The detail of the report was even weaker than the headline. Consumers and businesses essentially went on strike in Q3, with consumption and investment both very weak.”

“Overall private sector demand fell again. While the tick-up in annual growth could be viewed as a very “gentle turning point”, the slump in private sector spending will be very disappointing for the RBA. In our view, this will keep the Bank in easing mode in H1 2020.”

“With growth so narrowly based, the outlook for the economy remains very uncertain. There are few reasons to hope for a short-term recovery given that investment plans have been cut, housing approvals are still trending lower and consumer confidence remains in the doldrums. It seems inevitable that the economy will require further policy stimulus to lift it out of its current funk.”

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