Australia's economy likely contracted in Q3 but recovery expected soon: Reuters poll




  • In Business
  • 2021-11-29 00:10:19Z
  • By Reuters
 

By Shaloo Shrivastava

BENGALURU (Reuters) - Australia's economy likely contracted in the third quarter as fresh lockdowns weighed on consumer spending and investments, but the extent of the fall was milder than the historic recession recorded last year, a Reuters poll showed.

Despite Australia's success last year in containing the COVID-19 virus, fresh flare ups and the stay-at-home rule imposed this year severely dented economic activity leading to job cuts and calls for a ramped-up vaccination drive.

The Nov. 23-26 poll of 24 economists showed the A$2.07 trillion ($1.5 trillion) economy contracted 2.7% during the July-September quarter. Forecasts ranged from -3.8% to -1.9%.

If economists predictions were realised, it would mark a sharp turnaround in economic activity from the 1.8% and 0.7% expansion rates in the January-March and April-June quarters respectively.

"Extended stay-at-home orders in New South Wales and Victoria will have hit consumption, with services spending set to be particularly impacted," said Felicity Emmett, senior economist at ANZ.

The year-over-year growth was estimated at 3.0% but that was over a decline of 3.6% in the third quarter last year, revealing no substantial growth.

Data released by the Australian Bureau of Statistics on Thursday showed capital expenditure fell a real 2.2% in the third quarter but an upgrade to future spending showed analysts were expecting a rapid recovery to take hold.

Construction activity too declined last quarter but at a much smaller rate than expected, showing a recovery was not far off.

"The fact investment held up pretty well, we expect GDP to surpass its pre-delta level this quarter. Consumption will probably rebound very sharply given lockdowns have now ended," said Marcel Thieliant, senior Australia & New Zealand economist at Capital Economics.

Despite the setback to economic growth last quarter, economists do not see that trend turning into a full blown recession.

With about 86% of Australia's adult population now vaccinated and most restrictions eased, a swift recovery is anticipated on higher consumer spending.

"There is a saying that while history doesn't repeat, it does rhyme. The pattern for GDP in the second half of 2021 is certainly rhyming with the middle quarters of 2020 - a sharp decline followed by a large bounce," wrote economists at ANZ.

($1 = 1.3986 Australian dollars)

(Reporting by Shaloo Shrivastava; Polling by Md. Manzer Hussian and Devayani Satyan; Editing by Marguerita Choy)

COMMENTS

More Related News

Asian Stocks, U.S. Futures Up as Apple Eases Gloom: Markets Wrap
Asian Stocks, U.S. Futures Up as Apple Eases Gloom: Markets Wrap

(Bloomberg) -- Asian stocks Friday recovered some of the losses sparked by the Federal Reserve's pivot to tighter monetary policy, while U.S. equity futures ...

Australia drugs regulator approves COVID-19 boosters for 16- and 17-year-olds
Australia drugs regulator approves COVID-19 boosters for 16- and 17-year-olds
  • US
  • 2022-01-27 21:47:43Z

Australia's drug regulator on Friday approved the use of COVID-19 vaccine booster shots for 16- and 17-year-olds as authorities urge people to get their...

US economy grows at fastest pace in decades
US economy grows at fastest pace in decades

Economic activity jumped by 5.7% in 2021, but analysts expect growth to slow this year.

Asia Stocks Mixed, Treasuries Trim Drop After Fed: Markets Wrap
Asia Stocks Mixed, Treasuries Trim Drop After Fed: Markets Wrap

(Bloomberg) -- Asian stocks were mixed and Treasuries trimmed a drop Thursday as investors evaluated Federal Reserve Chair Jerome Powell's signal of a March ...

Protests, citizenship festivities to mark contentious Australia Day holiday
Protests, citizenship festivities to mark contentious Australia Day holiday
  • US
  • 2022-01-26 01:19:06Z

MELBOURNE (Reuters) -Thousands rallied against the mistreatment of Indigenous people across Australia on Wednesday as citizenship ceremonies took place to...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business