Australia: Sharp decline in Q3 GDP, but it’s expected to bounce back - HSBC

Research Team at HSBC, shares their view on Australia’s Q3 GDP that today’s GDP print was very weak and a significant downside surprise as the real GDP fell by -0.5% q-o-q (market had -0.1% q-o-q), which was the first quarterly fall in GDP since Q1 2011.

Key Quotes

“The downside surprise was mostly driven by a sharper-than expected fall in investment, which more than offset a modest rise in household consumption and inventories. Net exports were a drag in the quarter, as coal production was also temporarily disrupted. However, the Q3 results pre-date much of the ramp up in bulk commodity export prices and there is a significant ramp up in export volumes yet to come from capacity that has already been built. The strong rise in bulk commodity prices is set to support a boost to incomes in Q4. Timely indicators of business sentiment, retail sales and job advertisements suggest a lift in growth in Q4. In short, we think this will be a one-off decline, with growth returning in Q4.”