<p data-end="524" data-start="374">Rockdale has long been characterized as a suburb on the cusp. Well-located, well-connected, but historically underserved by modern apartment offerings.</p>

<p data-end="956" data-start="526">It has everything going for it: outstanding connectivity to the Sydney CBD, just four train stops to Central Station, strong local amenity anchored by Roc​kdale Plaza and a growing main-street dining scene, and enviable proximity to Brighton-Le-Sands. The six-kilometre beachfront is lined with bayside restaurants, cafés, and walking paths, giving residents a lifestyle typically associated with much more expensive coastal suburbs.</p>

<p data-end="1241" data-start="958">What Rock​dale has lacked is high-quality contemporary apartments. Most existing developments date back several decades, with floorplans that no longer support modern living needs, and buildings constructed long before today’s standards in engineering, efficiency, and sustainability.</p>

<p data-end="1627" data-start="1243">Lender, fund manager and apartment developer Princeton identified the gap early. Seeing all the right ingredients in Rockd​ale, transport, lifestyle, retail, and affordability, they set out to deliver what the suburb was missing. Their answer is <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a>, a collection of 58 one-, two-, and three-bedroom apartments now nearing completion just a short walk from Ro​ckdale Plaza, home to over 50 specialist retailers and anchored by&nbsp;Woolworths, Big W and Aldi.</p>

<p data-end="1627" data-start="1243">[smartcode_project:default project_id=136442 project_image_fid=355216]</p>

<p data-end="1847" data-start="1680">Understanding they would be resetting the benchmark for the area, Princeton focused on ensuring buyers received best-in-class quality, longevity, and protection.</p>

<p data-end="2400" data-start="1849">A major step was securing the sought-after Latent Defects Insurance policy from Resilience Insurance. This policy protects apartment buyers from structural or waterproofing defects for the first 10 years of the building’s lifecycle. Crucially, it is first-response insurance, meaning that if an issue arises, the insurer pays immediately for remediation—rather than waiting for lengthy investigations to determine fault before work can begin. For purchasers, it offers an unprecedented layer of security rarely seen in Sydney apartment projects.</p>

<p data-end="2845" data-start="2402">During construction, independent building inspection firm SDSS has been providing Technical Inspection Services, bringing highly specialised construction experts on-site at key stages to ensure workmanship meets the highest standards. The project is being built by Coplex, an iCIRT-rated construction company, and throughout the build SDSS has frequently referred to <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a> as one of the best projects currently on their books.</p>

<p data-end="3134" data-start="2884">Princeton also doubled down on comfort, acoustics, and livability.&nbsp;As well as being the only building along Princes Highway with a landscaped buffer between the building and the road, Princeton has purposefully included double-glazed windows in all apartments to reduce noise.</p>

<p data-end="3134" data-start="2884">Apartments feature double-glazed, noise-reducing windows and ducted air conditioning in every residence.&nbsp;In addition to the project’s transport convenience, Princeton has partnered with GoGet Car Share to provide a dedicated GoGet vehicle housed permanently within the building. Residents will receive a free annual GoGet membership, paying only usage fees, offering a flexible alternative to owning a second car and enhancing the project’s sustainability credentials.</p>

<p data-end="3134" data-start="2884">[smartcode_project:default project_id=136442 project_image_fid=277075]</p>

<p data-end="3271" data-start="3136">Residents will enjoy an exclusive rooftop oasis, purpose-designed as an extension of their living space. The communal rooftop includes BBQ facilities and outdoor entertaining areas, a&nbsp;pergola-shaded dining zone, a dedicated children’s play space, and a landscaped herb garden.</p>

<p data-end="3558" data-start="3424">Princeton and Coplex is approaching completion of <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a>, and are expecting residents to move in early in the new year. The mix of apartment configurations and price points have been a hit with young professionals, those who need to commute to the CBD, and families who appreciate doorstep amenity.</p>

<p>“Marque is a place where residents will be proud to call it home," Princeton Head of Development George Young says.</p>

<p>"We’ve worked really hard with Coplex and our design team to deliver an incredible building for the future home owners to make their own. The homes are all designed to allow the residents to make it their own, a place to belong and live a stylish urban life."</p>

<p data-end="3558" data-start="3424">[smartcode_project_cta:default project_id=136442]</p>


Joel Robinson

Marque Rockdale sets a new standard of apartment living in Sydney's south

<p>Plans to revitalize the&nbsp;long-established Benowa Gardens Shopping Centre into a mixed-use community combining living, shopping, dining, health and wellbeing facilities, have been proposed to the Gold Coast City Council.</p>

<p>The Benowa Gardens Urban Village proposal by Benowa Gardens Holdings seeks to transform the 17,660 sqm site at <a href="https://www.apartments.com.au/new-apartments/203-ashmore-road-benowa-qld-4217">203 Ashmore Road</a> into a contemporary, sustainable destination that reflects global trends in modern community design while retaining the familiar local character residents value.</p>

<p>The site is bordered by Ashmore and Benowa Roads and Carrara, with ready access to Pindara private hospital, four schools, TAFE, sports fields and the nearby Botanic Gardens.</p>

<p>Benowa Gardens Holdings is seeking a preliminary Council approval only for its proposed masterplan and variations to the site’s Neighbourhood Centre zoning.&nbsp;<br />
Formal Public Exhibition commenced Friday and also marks the start of comprehensive community consultation with surroundings residents, schools, P&amp;Cs, existing retailers, nearby sporting clubs, arts groups and Botanic Gardens volunteers.</p>

<p>Designed by Neylan Architecture, the masterplan envisions around 413 new apartments, complemented by upgraded retail, dining, and wellness amenities as part of 10,000 sqm of retail, and 9,630 sqm of office space/medical suites.</p>

<p>The development will feature green open spaces, shaded promenades, landscaped terraces, pedestrian walkways, and expanded healthcare and lifestyle services in synergy with the neighbouring Pindara Private Hospital and local schools.</p>

<p><img alt="Benowa" data-entity-type="file" data-entity-uuid="244f4d54-2e67-4141-92b8-78d5735f47c2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2012.47.34%E2%80%AFPM.png?VersionId=FmF5lzhpwVZc7POsdB770TJ_Bf2c0od8" /></p>

<p>“This concept embraces the way people increasingly want to live - safely, conveniently, and within strong local communities,” said Patrick Lu, Director of Benowa Gardens Holding.</p>

<p>“Benowa Gardens will set a new benchmark for integrated living on the Gold Coast. It’s a thoughtful, community-minded evolution that brings global best practice in urban design to one of the city’s most established areas.”</p>

<p>Lu said this isn’t just a redevelopment, it’s a renewal with purpose.</p>

<p>“Benowa Gardens has served the community for decades. Our goal is to ensure it continues to do so for generations to come, as a lively, connected Urban Village where people can truly live, work and thrive. We’re already talking to school leaders and the community to seek their feedback on our proposal, and have taken on board their ideas to improve student safety with additional “traffic calming” measures on Carrara Street. We’re conducting meaningful and sincere consultations and want to play our role in preserving and enhancing the local community."</p>

<p>The proposed redevelopment aims to deliver tangible benefits across the Benowa and wider Gold Coast community, including:</p>

<ul>
	<li>Improvement of retail amenity, to capture the under-served local market demand and keep the local business at their local shopping centre.</li>
	<li>Housing diversity; offering a range of apartment types for key workers, downsizers, and local families who wish to remain in the area.</li>
	<li>Enhanced shopping and dining; revitalised retail spaces designed to support local businesses and attract more visitors.</li>
	<li>Health and wellbeing access; additional medical and wellness amenities to complement existing local facilities.</li>
	<li>Improved traffic flow and access; two new access points, upgraded intersections, upgrade pedestrian pathway’s signal and proposed upgrade of pedestrian and cycle connections/space to improve safety and convenience, especially for school children.</li>
	<li>Environmental sustainability; energy-efficient design, green rooftops, and water-sensitive landscaping to reduce emissions and enhance comfort.</li>
	<li>Local jobs and investment; supporting hundreds of construction and long-term roles while stimulating local economic growth.</li>
</ul>

<p>The group behind the project boasts extensive experience in the property development industry, both in Australia and international markets. Over the past 23 years, the group has been involved in the development and management of a diverse portfolio of assets including residential dwellings, shopping centres, bulky-goods stores, community and medical facilities, childcare centres, offices, hotels, and taverns, across Brisbane, Ipswich, and the Gold Coast.</p>


Benowa Gardens to become new mixed-use urban village

<p>Demand for townhouses in Melbourne’s inner west has surged as buyers seek the elusive combination of space, affordability, and location.&nbsp;</p>

<p>With family-first apartments increasingly rare and standalone homes often out of reach, townhouses have emerged as the new sweet spot, delivering generous living areas with lower maintenance needs within close proximity to the Melbourne CBD.&nbsp;</p>

<p><a href="https://www.apartments.com.au/new-townhouses/kings-lane-south-kingsville-50-58-new-street-south-kingsville-vic-3015">Kings Lane</a>, the new under-construction townhouse development by the family-owned developer&nbsp;<a href="https://www.apartments.com.au/developers/blue-run">Blue Run</a>&nbsp;in South Kingsville, responds directly to this trend. Comprising just 25 residences designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, the project offers a compelling alternative to both apartment downsizers and family upsizers. With three-bedroom homes priced under $1 million, it presents one of the area’s rare attainable pathways to townhouse living less than eight kilometres from the CBD.</p>

<p>[smartcode_project:default project_id=145042 project_image_fid=355147]</p>

<p><a href="https://www.apartments.com.au/developments/south-kingsville-vic-3015">South Kingsville</a> itself is quietly becoming one of Melbourne’s most dynamic pockets of urban renewal. Flanked by the established appeal of Yarraville, Newport and Williamstown, the suburb balances quiet, village-like streetscapes with major infrastructure upgrades and a growing slate of retail, dining and lifestyle amenity.&nbsp;</p>

<p>Kings Lane occupies a well-connected site at 50–58 New Street, just off Blackshaws Road and within walking distance of the emerging Union Quarter precinct, a major retail destination anchored by Woolworths, specialty food outlets and wellness services.</p>

<p>A 400-metre stroll brings residents to the Vernon Street shops, a local favourite known for its mix of independent grocers, cafes and family-run eateries. For broader shopping options, Altona Gate Shopping Centre and Yarraville Square are both within a short drive. Spotswood IGA and the Williamstown retail strip further broaden the convenience of daily essentials.</p>

<p>[smartcode_project:default project_id=145042 project_image_fid=355139]</p>

<p>Dining options in the area lean toward eclectic and community-driven, with standouts like Rocco’s Deli, Dad and Dave’s, and Pizza d’ASPORTO offering a range of casual and elevated menus. Cafés such as Hudson Road Wine &amp; Beer and Blacksheep Coffee add to the lively yet local feel of the neighbourhood.</p>

<p>Green space is another hallmark of life at Kings Lane. Edwards Reserve is close enough for morning walks or casual sport, while larger parks like Newport Lakes, Yarraville Gardens, and Cruickshank Park are all a few minutes’ drive away. More than half of the nine-hectares of new green space or parkland being created as part of the West Gate tunnel works is located just at the end of New Street, the same street as Kings Lane.</p>

<p>&nbsp;</p>

<p>For those with school-age children, South Kingsville is home to a range of quality childcare centres and schools, including Kingsville Primary, Spotswood Primary, and Williamstown North Primary. Community Children’s childcare and South Kingsville Preschool are nearby, making the suburb particularly attractive to young families.</p>

<p>Transport links continue to improve, with Spotswood Station and the West Gate Freeway both within a five-minute radius. Future upgrades, including the proposed sky rail for Newport and Spotswood, and the delivery of the West Gate Tunnel project, promise even better access to the CBD and Melbourne Airport in the years to come.</p>

<p>Kings Lane's 25 all-electric townhouses are currently under construction, and will complete in late 2026.</p>

<p>[smartcode_project_cta:default project_id=145042]</p>


Staff Writer

Kings Lane townhouses offers rare value in Melbourne's thriving inner west

<p>Developer-builder <a href="https://www.apartments.com.au/developers/billbergia">Billbergia</a> has set a new apartment price record for <a href="https://www.apartments.com.au/developments/rhodes-nsw-2138">Rhodes</a>, a suburb the company has been instrumental in transforming over the past two decades.</p>

<p>The milestone follows the delivery of thousands of apartments across the harbourside peninsula, culminating in the $4.5 million sale of a 220 sqm penthouse in the <a href="https://www.apartments.com.au/buildings/rhodes-central-oasis-39-marquet-street-rhodes-nsw-2138">Rhodes Central Oasis</a> building, which Billbergia completed earlier this year. It is the first apartment in Rhodes to surpass not only the $4 million mark for settled sales, but also the $3 million mark, eclipsing the previous $2.75 million record set in 2021.</p>

<p>The purchaser had originally secured several apartments in the 40-storey tower off the plan as investments. During settlement, she spent more time in the Rhodes area and was so impressed with the building that she decided to downsize from her Northbridge home into the four-bedroom plus MPR penthouse.</p>

<p>The sale underscores the long-term work Billbergia has undertaken in Rhodes since the early 2000s. The company, rated 4.5 Gold Stars under the NSW iCIRT system, identifying it as one of the state’s most trustworthy and financially secure developers, was a pioneer of the area’s urban renewal. What was once a heavily industrial waterfront has become one of Sydney’s most successful examples of transit-oriented development.</p>

<p><img alt="Billbergia" data-entity-type="file" data-entity-uuid="56093d7f-db18-42f4-bf9b-115bdf76f5f3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2011.10.06%E2%80%AFAM.png?VersionId=pca77Mr.H83nwXbJexmaLUAqBewtQ7d9" /></p>

<p>Billbergia is now driving the peninsula’s next major evolution: the most ambitious project in its nearly four-decade history. They are planning the Rhodes Bay Masterplan, an eight-tower, mixed-use precinct on Leeds Street. Currently with the NSW Government’s Housing Delivery Authority which is now championing large-scale projects across the state, the Rhodes Bay Masterplan lays the groundwork for a generational reshaping of this important pocket of Sydney’s Inner West.</p>

<p>The masterplan spans more than 31,000 sqm of amalgamated industrial land along the foreshore, land that has been privately held and inaccessible to the community for more than a century. According to Billbergia’s Development Director, Saul Moran, reclaiming this land for public use is central to the company’s vision.<br />
<br />
“What’s so exciting is that we have over 300 metres of privately-held industrialised waterfront, land that’s been locked away for more than 100 years, which we’re bringing back to the community,” he says. “It’s taken many years to assemble sites like these, and the goal now is to transform them into meaningful public space where new homes can be built in an integrated, amenity-rich setting.”</p>

<p>At full completion, the Rhodes Bay Masterplan is expected to deliver over 2000 apartments, with the first 1000 to be completed by 2029. Billbergia’s design focused on nine slender towers, so they could give back more to the ground plane. There will be more than 16,000sq m of new parkland and recreation space, including sports fields, a foreshore play area and waterfront green links. Around 14,600 sqm of retail is also proposed, extending the precinct’s role as a true mixed-use hub.</p>

<p><img alt="Rhodes Bay" data-entity-type="file" data-entity-uuid="240ffc41-4f26-421a-9606-5c56f6fc2d93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2011.05.48%E2%80%AFAM.png?VersionId=BkBxZr7S8CAt1vgNa8AF3zjdc3YuVh0L" /></p>

<p>“Density only works when it’s paired with amenity, transport and open space, and that’s what’s made Rhodes such an amazing success story,” Moran says, adding that the demographic shift Billbergia has seen over the last two decades has informed their future development pipeline in the suburb.</p>

<p>“Rhodes has moved from being largely an investor market to a strong owner-occupier community,” Moran says. “There’s real demand for three-bedroom homes, flexible intergenerational layouts, and apartments people can grow into.”</p>

<p>&nbsp;“We’re designing taller, more slender towers to free up the ground level for sport, recreation and green space. High-density communities thrive when people have the best backyards in Australia, and that’s what we want to create here.”</p>

<p>Demand remains robust, evidenced by Billbergia’s recent results. “We achieved a record sale across the entirety of Rhodes Central just last week,” Moran says. “It shows the depth of confidence buyers have in what’s being built here.”</p>

<p>Billbergia’s vertically integrated model allows them to overcome the recent cost escalation and challenges in the build environment. “Having an in-house construction team lets us control feasibility, value management and quality from day one,” Moran says. “It’s critical in the current market, where construction escalation is at the forefront of every project’s viability.”</p>

<p>The company is also leveraging the NSW Government’s new Housing Delivery Authority process, which Moran describes as a more efficient pathway without compromising design standards.<br />
<br />
“We’re really applauding the NSW Government for its efforts to increase housing supply. There’s been a remarkable improvement in how they’re helping deliver more homes, more quickly.”</p>

<p>Billbergia has already commenced construction of Stage One of the Rhodes Bay masterplan. They will be lodging the State Significant Development Application before Christmas.</p>

<p>“We’re moving quickly, but with due care,” Moran says. “This is a generational precinct, and it needs to be done right.”</p>


Billbergia smashes suburb record as Rhodes transformation continues

<p>The sheer scale of the two skyscrapers at <a href="https://www.apartments.com.au/new-apartments/victoria-albert-broadbeach-20-albert-avenue-broadbeach-qld-4218">Victoria &amp; Albert</a>, soaring 40 and 64 storeys above the heart of Broadbeach, was always destined to deliver some of the highest and most luxurious apartments ever built in the suburb.</p>

<p>Now, builder-developer <a href="https://www.apartments.com.au/developers/iris-capital">Iris Capital</a> has unveiled the Horizon Collection, a selection of residences with the largest floorplans and most commanding views in the towers. The three-bedroom apartments, starting from $4.64 million, include butler’s pantries, multi-purpose rooms, and, in some layouts, master retreats with private sitting areas.</p>

<p>[smartcode_project:default project_id=107928 project_image_fid=3944]</p>

<p>The most prestigious apartments in the Horizon Collection are the sub-penthouses and penthouses. The two sub-penthouses on the 38th level of the Albert Tower are priced at $8.85 million.</p>

<p>Each features three bedrooms, a study, and a flexible multi-purpose room with a sliding partition that allows half the space to function as a games room.</p>

<p>The open-plan kitchen, living, and dining area, complete with a butler’s kitchen and private wine cellar, flows onto a full-width balcony framing panoramic coastal views.</p>

<p>[smartcode_project:default project_id=107928 project_image_fid=3943]</p>

<p>There is now just one sub-penthouse for sale on the 62nd level of the Victoria Tower, with one already secured by an expat owner-occupier. The remaining sub-penthouse, priced at $8.95 million, offers four bedrooms and a wraparound balcony that captures panoramic views up and down the Coast. vistas from every angle.</p>

<p>Crowning each tower is a full-floor penthouse offering multiple expansive indoor and outdoor living and entertaining spaces. Atop the Victoria building is Oceania, which measures over 735 sqm of living space, and Kurrara atop the Albert Tower, which is almost 800 sqm. They each have four bedrooms, including a master and guest suites, a full 360-degree panorama of the Gold Coast, and all the bells and whistles expected of a luxury penthouse. They are priced from a little over $18 million.</p>

<p>“Every detail, every finish has been thoughtfully considered to imbue the penthouses with the ultimate sense of luxury,” says Susan Rossi, Director of Interior Design at <a href="https://www.apartments.com.au/architects/dbi">DBI</a>, who led both the architecture and interiors for V&amp;A. “We shaped these skyhomes to embody the spirit of Gold Coast luxury.”</p>

<p>[smartcode_project:default project_id=107928 project_image_fid=234091]</p>

<p>Victoria &amp; Albert, colloquially known as V&amp;A, is the flagship Gold Coast development by the Sydney-based Iris Capital. Led by developer and hotelier Sam Arnaout, Iris Capital acquired the landmark Niecon Plaza site in 2021. At the time, Arnaout described the company’s expansion into Queensland as a strategic move to capitalise on one of Australia’s strongest growth markets.</p>

<p>“We were initially looking to expand into Victoria, but the massive migration to the regions that followed the pandemic created a new dynamic across the Australian market,” Arnaout said.</p>

<p>“From a strategic point of view, Queensland — and the Gold Coast in particular — is the perfect fit for our business. The fundamentals here are strong: genuine employment growth, high net migration, and an undersupply of apartments driven by strong demand. The Gold Coast has matured into a thriving, progressive regional city with a fantastic future.”</p>

<p>[smartcode_project:default project_id=107928 project_image_fid=234097]</p>

<p>Across its two towers, V&amp;A will deliver 425 luxury apartments, supported by a suite of resort-style resident amenities. These include a subtropical podium featuring a 25-metre lap pool, gym, yoga deck, residents’ lounge, kids’ play area, zen garden, and barbecue terraces with outdoor dining spaces.</p>

<p><a href="https://www.apartments.com.au/project-marketer/colliers">Colliers</a> Queensland Director David Higgins, who has managed sales at V&amp;A since its 2021 launch, says the project has set a new benchmark for Broadbeach’s luxury apartment market. Colliers Queensland Director David Higgins, who has managed sales at V&amp;A since its 2021 launch, says the project has set a new benchmark for Broadbeach’s luxury apartment market.</p>

<p>“The premium market has definitely spoken, with V&amp;A having now reached over half a billion dollars in presales since our launch,” Higgins says, adding that over 65 per cent of V&amp;A is now sold.</p>

<p>“Our buyers continue to validate the success of the Victoria &amp; Albert development vision and the luxury amenity that comes along with their apartment purchase. Of course, Broadbeach’s most walkable location, just 100m from the Broadbeach surfing beach, makes this luxury apartment a compelling addition to your real estate portfolio.”</p>

<p>Last year, Iris Capital brought construction in-house through its new arm, Iris Built. Completion of the 40-level Albert Tower is scheduled for late 2027, with the 64-level Victoria Tower, the taller of the two, expected to follow in mid-2028.</p>

<p>[smartcode_project_cta:default project_id=107928]</p>


Victoria & Albert’s Horizon Collection takes Broadbeach living to new heights

<html><body>
<p><strong>Expert Observer</strong></p>

<h2><strong>National accounts</strong></h2>

<p><strong><u>‘V-shaped’ recovery:</u> </strong>The Australian economy (as measured by gross domestic product or GDP) grew by 3.1 per cent in the December quarter (consensus: +2.5 per cent) after rising 3.4 per cent in the September quarter and contracting 7 per cent in the June quarter. It was the biggest six-month lift in GDP since quarterly records began in 1959. GDP is still 1.1 per cent smaller than a year ago.</p>

<p><strong><u>Annual result:</u> </strong>In 2020, the economy contracted 2.5 per cent (biggest fall since 1947) after growing 1.9 per cent in 2019.</p>

<p><strong><u>Contribution to growth</u>: </strong>The biggest contributions to growth came from household spending (+2.3 percentage points); business equipment (+0.3pp); ownership transfer costs, dwellings, government consumption (all +0.2pp); and public investment (+0.1pp). But detracting from growth was net exports, commercial construction and inventories (all -0.1pp).</p>

<p>[smartcode_project:default project_id=7275]</p>

<p><strong><u>Income:</u> </strong>Real net national disposable income rose by 4.9 per cent in the December quarter and was up by 2.1 per cent on the year. In nominal terms GDP rose by 4.2 per cent in the quarter and rose by 0.6 per cent over the year.</p>

<p><strong><u>Productivity:</u> </strong>GDP per hours worked was flat in the December quarter but was up by 2.5 per cent on the year.</p>

<p><strong><u>Industry sectors:</u> </strong>Seventeen of the 19 industry sectors grew in the December quarter. The biggest contribution to the overall increase in output came from <em>Agriculture, Forestry and Fishing</em> (+0.5 percentage points) from <em>Professional, Scientific and Technical Services and Administrative and Support Services </em>(both +0.3pp). Output fell 1.0 per cent in <em>Mining</em> in the quarter with <em>Electricity, Gas, Water and Waste Services</em> down 0.9 per cent.</p>

<p>[smartcode_project:default project_id=92985]</p>

<h2><strong>What does it all mean?</strong></h2>

<p>It has been a most curious period for the Australian economy. After entering recession in the first half of 2020, the economy roared back in the final six months of the year. Clearly it has been all about Covid-19. Australian governments and the central bank responded quickly in locking down the economy and in providing the support and stimulus to families and businesses. The moves to suppress the virus were effective as were the support and stimulus measures.</p>

<p><img alt="" height="977" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/record_gdp_commsec.jpg" width="1200"></p>

<p>The ‘V-shaped’ nature of the recovery is everywhere to see – economic growth, the job market, retail spending and the housing market. The Reserve Bank acknowledges that the recovery has been stronger than expected.</p>

<p>But the job is not done. The economy is still around 1 per cent smaller than a year ago. Unemployment is still too high; inflation and wage growth are still too low. But the forward indicators like job ads and business and consumer surveys are positive.</p>

<p>We expect the economy to rebound 4.2 per cent in 2021 after contracting 2.5 per cent in 2020. Much still depends on Aussies doing the right thing with social distancing measures. The vaccine roll-out is in the infancy. And then there is the risk posed by mutant strains of the virus.</p>

<p>[smartcode_project:default project_id=2772]</p>

<p>Stimulus and support measures are still very much required, and any scale-back needs to be carefully managed. The Reserve Bank certainly hasn’t changed its rhetoric. Rates will remain low for another three years. Bond buying will continue. Cheap loans will remain under offer to business.  </p>

<p>The all-important jobless rate is expected to ease from 6.4 per cent currently to 5.7 per cent by the end of 2021. While still high, clearly it is moving in the right direction. But spare capacity will remain in the job market for a few more years, keeping the cash rate anchored at 0.1 per cent.  </p>

<p>Craig James is the chief economist at CommSec</p>
</body></html>

We expect the economy to rebound 4.2 per cent in 2021 after contracting 2.5 per cent in 2020

Biggest economic rebound on record: CommSec's Craig James

<html><body>
<p>Expert Observer</p>

<p>The Q4 National Accounts confirmed a brisk rebound in activity.</p>

<p>GDP printed at 3.1%qtr, -1.1%yr.</p>

<p>This was above expectations, market median and Westpac 2.5%.</p>

<p>[smartcode_project:default project_id=7275]</p>

<p>As we had flagged, the risks were to the upside – with the expenditure partials having surprised to the high side. That is how it played out.</p>

<p>The key theme, the economy rebounded rapidly through Q3, +3.4%, and Q4, +3.1%, with considerable momentum into 2021.</p>

<p>Consumers and businesses are upbeat, state governments are spending up, the housing market is red hot and the vaccine roll-out is underway.</p>

<p>Success on the health front has permitted the rolling back of most, but not all, covid restrictions. Victoria emerging from a second lock-down boosted activity in Q4 and will do so again in Q1.</p>

<p>[smartcode_project:default project_id=92985]</p>

<p>The recovery broadened in Q4:</p>

<p>(1) home building, up 4.1%, following a +1.6% for Q3, the first gains since June 2018, in response to cheap credit and government incentives, and</p>

<p>(2) business investment advanced, up 2.6%, led by equipment spending, +8.1%, in response to the accelerated depreciation allowance. That follows a string of negatives.</p>

<p>Real estate activity (ownership transfer costs) surged a further 15.2%, after a 21.6% rebound in Q3, to be 15.3% higher over the year – with the established housing market booming.</p>

<p>Consumer’s ability and willingness to spend is the key dynamic – certainly the relaxing of covid restrictions provides consumers with more opportunities to spend.</p>

<p>[smartcode_project:default project_id=2772]</p>

<p>The household saving ratio spiked to 22% in Q2, on the drop in spending associated with the lock-down and the wave of government income support. The savings rate moderated to 18.7% in Q3 and retraced to 12% in Q4 and will unwind further in 2021.</p>

<p>The critically important point, while there was a tapering of government support in Q4, which saw business profits moderate off a high level, consumers have a sizeable savings buffer to fund a further lift in spending – and that is what they are choosing to do.</p>

<p>The consumer picture was largely as expected with spending posting another strong gain, led by normalising conditions in Victoria, and despite a material drag on incomes from reduced fiscal supports.</p>

<p>Total consumption rose 4.3%qtr to be down just 2.7%yr. Victoria posted a 10.4% gain in the quarter, spending up 2.3%qtr across the other states combined.</p>

<p>The spending detail was a little stronger than expected around vehicles and retail but a touch softer than expected on services.</p>

<p>[smartcode_project:default project_id=24323]</p>

<p>Around incomes, wages rose 1.4%qtr with a strong increase in employment and hours worked more than offsetting initial drags from the wind-back in JobKeeper support. However real disposable income – including small business and non wage incomes and net of interest and tax – recorded a sizeable 3.3% fall. The rise in spending was thus funded out of a reduction in new savings, the savings rate falling from 18.7% in Q3 to 12% in Q4</p>

<p>Public demand continues to be a growth driver, up 1.0% in the quarter and a very brisk 6.5% over the year, in part driven by the response to covid.</p>

<p>Net exports were a small negative, -0.1ppt, as imports roared back, +4.9%, to meet the brisk rebound in domestic demand. Inventories, in total, subtracted -0.1ppt.</p>

<p>In other detail, the Expenditure measure of GDP printed at 3.0%, Income at 3.3% and Production at 3.1%.</p>

<p>Andrew Hanlan is a senior economist at Westpac.</p>
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Consumers and businesses are upbeat, state governments are spending up, the housing market is red hot and the vaccine roll-out is underway.

December quarter sees GDP grow 3.1%: Westpac's Andrew Hanlan's insights

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<h3 class="post-title entry-title"> </h3>
<div id="post-body-2781265956150443664" class="post-body entry-content">
<div>Australia's GDP increased to $1.67 trillion in financial year 2016, measured in seasonally adjusted Chain Volume Measures terms, now tracking at just above $420 billion per quarter.</div>
<div> </div>
<div>Following on from yesterday's post, a quick look here at industry gross value added (GVA).</div>
<div> </div>
<div>Having accounted for just over 5 per cent of industry GVA three decades ago, mining's share has swelled to 8.9 percent as export volumes begin to ramp up.</div>
<div> </div>
<div>Finance and insurance also now accounts for 8.9 per cent of industry GVA, up from just 4.9 per cent in 1986.</div>
<div> </div>
<div>You can click on the chart to expand it (or use the touch screen, if you have one of those, of course).</div>
<div> </div>
<div><a href="/images/2016/09/28/GVA.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><img src="/images/2016/09/28/GVA.jpg" alt=""></div>
<br><div class="separator"> </div>
<div>On the other hand, manufacturing is shrinking as a share of the pie, declining from a share of 11.1 percent at the beginning of this chart to just 5.8 percent in 2016.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Construction wind-down</span></strong></div>
<div> </div>
<div>The latest figures show that the contribution of construction to GDP has remained solid at 7.6 per cent, tracking at around $32 billion per quarter.</div>
<div> </div>
<div>A decade ago construction was contributing only $13 to $14 billion per quarter. </div>
<div> </div>
<div>This suggests that the planned 'hand-off' from resources to residential construction was generally a success between 2012 and 2016. </div>
<div> </div>
<div>However, this does also mean that as residential construction eventually winds down there will be quite a hole in domestic demand to be plugged by something other than rising mining export volumes.</div>
<div> </div>
<div>Given the respective skill-sets of all those construction workers, tradies, and project managers, the answer should be: infrastructure and non-residential construction, as I looked at in a bit more detail here. </div>
<div> </div>
<div>Indeed, the unprecedented stamp duty windfall from Sydney's property boom is already funding a range of infrastructure projects in Sydney and New South Wales. </div>
<div> </div>
<div>But what about the gaping gulf left behind in the resources regions? </div>
<div> </div>
<div>Troubling, and this may be leading to an exodus of regional workers. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
</div>
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pwargent-M4siyDbqQY

When construction winds down: Pete Wargent

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<div id="post-body-2934597644349298689" class="post-body entry-content">
<div class="separator">Some years ago there were doomsday predictions of a property correction in Australia since dwelling prices had reached three times the value of our Gross Domestic Product (the exact relevance of the three times figure was never adequately explained).</div>
<div class="separator"> </div>
<div class="separator">Today, the ratio is just over 3.6 times, having ticked down slightly over the past six months of publicly available official figures.</div>
<div class="separator"> </div>
<div class="separator">Is there a link between the two measures? Kind of, but it's not very strong.</div>
<div class="separator"> </div>
<div class="separator">In fact, as a predictor of property prices the ratio has been useless in recent years. Actually, no, it's been worse than useless - it has been a contra-indicator!</div>
<div class="separator"> </div>
<div class="separator">One problem with GDP is that it's historic in nature, so at best it tells you what was happening in the economy months ago - thus as an indicator of future outcomes it's necessarily all that useful.</div>
<div class="separator"> </div>
<div class="separator">More pertinently this ratio doesn't make a lot of logical sense since it compares a <strong>stock</strong> value at a fixed point in time with a <strong>flow</strong>, being the value of goods and services produced over a specified period of time (in the example in the chart below, one year).   </div>
<div class="separator"> </div>
<div class="separator"><a href="/images/2016/07/06/STOCK.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/06/STOCK.jpg" alt=""></div>
<br><div>Furthermore, some types of property in thinner markets fare much better in times of boom, and worse in times of bust. And some types of property in some inner suburban locations tend to outperform the averages over time, while properties is lower demand generally fail to keep pace with the averages.</div>
<div> </div>
<div class="separator"><strong><span style="text-decoration: underline;">Key national accounts aggregates</span></strong></div>
<div class="separator"> </div>
<div class="separator">In today's electronically connected world, hordes have wanted to be the person to 'call' the next Australian recession. But the economy has proved to be surprisingly robust, with the annualised rate of GDP growth for the past six months accelerating to 3.6 per cent. </div>
<div class="separator"> </div>
<div class="separator">The riposte has been that GDP is the "wrong" measure - we should ignore GDP and look at national income. </div>
<div class="separator"> </div>
<div class="separator">It is indeed true that real (i.e. adjusted for inflation) gross national income has stalled, but then again Australia's commodity prices could not and did not grow to the sky, so this isn't necessarily that surprising. </div>
<div class="separator"> </div>
<div class="separator">Another way to look at this is that national income has more than doubled over the past twenty years, even after accounting for inflation.</div>
<div class="separator"> </div>
<div class="separator"><a href="/images/2016/07/06/GDP.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"> </div>
<div class="separator"><img src="/images/2016/07/06/GDP.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator">Moreover, if GDP is an unreliable measure of the performance of the economy, how can it be a good measure of dwelling prices? Can't have it both ways! </div>
<div class="separator"> </div>
<div class="separator"><strong><span style="text-decoration: underline;">National accounts</span></strong></div>
<div class="separator"> </div>
<div class="separator">The national accounts provide us with a range of figures relating to the property markets, but as implied by the name of the data release the figures are national and backward-looking in nature, and therefore don't really tell us much of interest about what sub-regional property markets are up to or will be up to.</div>
<div class="separator"> </div>
<div class="separator">As noted, the national accounts lag a bit, but broadly home owners owe about $1 trillion in mortgage debt, and investors about $550 billion. What is not so well shown by these figures is that mortgage buffers and offset accounts are also at record high levels. </div>
<div class="separator"> </div>
<div class="separator"><a href="/images/2016/07/06/DEBT1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/06/DEBT1.jpg" alt=""></div>
<br><div>With dwelling price growth having outpaced the growth in household debt, gearing ratios have declined in recent years.</div>
<br><div class="separator"><a href="/images/2016/07/06/DEBT2.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/06/DEBT2.jpg" alt=""></div>
<br><div class="separator">None of which tells of much of any predictive value. We can all think of housing markets in Australia that are overvalued; but equally we can all name others where prices are getting walloped or have already crashed. </div>
<div class="separator"> </div>
<div class="separator">If there is one ratio from the national accounts which is useful in predicting where to next for dwelling prices - and I'm not saying that there necessarily is - it's the ratio of housing interest payable to income. </div>
<div class="separator"> </div>
<div class="separator">The actual quoted percentage figure is skewed lower since so many households have no mortgage debt at all, but has declined from a peak of 16.4 per cent in June 2008 to 9.7 per cent by December 2015. </div>
<div class="separator"> </div>
<div class="separator">On this measure, mortgage repayments are more than 40 per cent cheaper than they were at their 2008 peak.</div>
<br><div class="separator"><a href="/images/2016/07/06/INTEREST%20PAYABLE.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/06/INTEREST%20PAYABLE.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator"><strong><span style="text-decoration: underline;">Rates heading lower?</span></strong></div>
<div class="separator"> </div>
<div class="separator">It would be fair to say that if mortgage rates head back to where they were at their most recent peak of about 8 to 9 per cent, then many of Australia's housing markets are heading into correction territory. </div>
<div class="separator"> </div>
<div class="separator">It's an interesting bet if you want to take it on. But money markets are begging to differ, with yields grinding out new lows in anticipation of possible Brexit turmoil. </div>
<div class="separator"> </div>
<div class="separator">Yesterday Australia's 10 year government bond yield fell to its lowest ever level at well below 2 per cent.</div>
<br><div class="separator"><a href="/images/2016/07/06/RBA.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/06/RBA.jpg" alt=""></div>
<br><div>Meanwhile, OIS rates are on a seek and destroy mission to crunch out new record lows, and they are winning that particular battle. We are now just one benign inflation print from seeing a new record low cash rate in August.</div>
<br><a href="/images/2016/07/06/OIS.jpg" target="_blank">Click to enlarge</a>
</div>
<div class="post-body entry-content">
<img src="/images/2016/07/06/OIS.jpg" alt=""><br><br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><br><div>GDP is a useful measure of the strength or otherwise of the economy. And over the long term stronger economic growth may be reflected in higher dwelling prices - but not necessarily so, since there are so many other contributory factors, such as tax settings or the supply of new dwellings, for example. </div>
<div> </div>
<div>It's true that property prices can fall during recessions. But then again they can fall when GDP is positive such as they did in 2011 and early 2012.<br><br>And what about China, where real GDP growth has slowed from above 13 per cent in 2007 to just 6.7 per cent (if you can call 6.7 per cent slow), yet house prices in Shenzhen have skyrocketed by more than 50 per cent within the past year?<br><br>Obviously there are many other factors at play than purely economic growth.  And if there is a correlation between GDP and dwelling stock valuations, it's a tenuous one. </div>
<div> </div>
</div>
<div class="post-footer"> 
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
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The GDP myth and doomsday property predictions: Pete Wargent

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<p class="legacy"><strong><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.15999984741211px;">EXPERT OBSERVER</span></strong></p>
<p class="legacy"><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.15999984741211px;">It became official on Wednesday. The Australian economy is in recession for the first time in nearly three decades.</span></p>
<p>And the drop in economic activity is unprecedented. GDP fell 7% in the June quarter. The previous biggest post-war fall in Australia was 2% in June 1974.</p>
<p>But Treasurer Josh Frydenberg noted that in March he was told the June quarter contraction might be 20%. In Britain it was.</p>
<p>Bookkeeping aside, the question that matters is how to fight this recession.</p>
<p>Answering it requires an understanding that it is a different type of recession to those we’ve seen before.</p>
<p>As I pointed out <a href="https://theconversation.com/vital-signs-covid-19-recession-is-different-and-we-need-more-stimulus-to-deal-with-it-141037" target="_blank">earlier this year</a> the recessions some of us grew up with in the early 1980s and 1990s were “business cycle” recessions.</p>
<p>They happened because the economy overtook its inbuilt speed limit and pushed up inflation. To curb it, central banks pushed up interest rates, pushed them up too far and choked off investment and spending, sending economic activity backwards.</p>
<h2>A recession like no other</h2>
<p>In 2020 we face a different sort of shock.</p>
<p>COVID-19 has hammered economic activity, even more so in countries such as the United States where it has run out of control.</p>
<p>Many of the opportunities we used to have to spend money (such as airlines, theatre tickets and cafe meals) simply haven’t been there.</p>
<p>They’ll come back when things return to closer to normal, perhaps though the wide deployment of a vaccine.</p>
<p>But we might not spend as we used to.</p>
<p>Some people, out of work or on shorter hours won’t have the capacity to spend. Others will want to rebuild their savings.</p>
<p>And others who have been saving big might decide to keep doing it.</p>
<hr>
<p><strong>Household saving ratio</strong></p>
<p><a href="https://images.theconversation.com/files/355997/original/file-20200902-22-yq9rjf.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/355997/original/file-20200902-22-yq9rjf.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> </p>
<p><em><span class="attribution"><span class="source">ABS Australian National Accounts</span></span></em></p>
<p>Australia’s household saving ratio surged to 19.7% in the June quarter.</p>
<p>It’s a peak not reached since 1974 at a time when there was much less of an age pension and superannuation, no Medicare and surging unemployment. In other words, its at a height not reached since people really needed to save.</p>
<p>The Bureau of Statistics says that if household income from all sources including early access to super was counted, the ratio is even higher. Its estimate of what it calls the “household experience savings ratio” is 24.8%.</p>
<p>That means households saved an extraordinary one in every four dollars that came through their doors in the June quarter, up from mere percentage points a few quarters earlier.</p>
<p>Much of it would have been what economists call <a href="https://www.propertyobserver.com.au/https://academic.oup.com/qje/article/132/3/1427/3071924?casa_token=NaR4tX3aSioAAAAA:5a0tN7y4nXtjvyxhO1tit2wcRHuU-NmyYeUJD2Md_gw6wnoLrLkYAwfNWxBE4XkYCfTVh4NeLIfL4rQ" target="_blank">precautionary saving</a>, understandable given how much of the future is uncertain.</p>
<h2>There’s such a thing as too much saving</h2>
<p>But what if this extraordinarily high saving rate lasts beyond the point it is understandable, as it did in Japan.</p>
<p>As with Japan in the 1990s when saving soared, real interest rates are negative. We are so <a href="https://web.mit.edu/krugman/www/japtrap" target="_blank">keen to save</a> we don’t need a financial return.</p>
<p>There were signs of it worldwide, well before the pandemic. President’s Clinton’s Treasury Secretary Larry Summers referred to it as <a href="http://larrysummers.com/2016/02/17/the-age-of-secular-stagnation/" target="_blank">secular stagnation</a>, a term first coined in the 1930s.</p>
<p>Saving more than we are prepared to invest shrinks economic activity. It creates unemployment which itself creates uncertainly, prodding people to save still more than they invest.</p>
<p>It’s one of the reasons worldwide economic growth is low, interest rates are low, and inflation is low.</p>
<p>During the pandemic the government is spending more than A$100 billion on measures such as JobKeeper and JobSeeker.</p>
<h2>If we won’t spend, out government will have to</h2>
<p>Post pandemic it might have to keep spending big on physical and social infrastructure – things such as major projects and better aged care and health care.</p>
<p>If we won’t spend big again, it’ll have to. It’ll need to get the economy’s long term growth rate back up to 2%, or even the <a href="https://treasury.gov.au/speech/the-macroeconomic-context" target="_blank">near 3%</a> the Treasury thinks it is capable of.</p>
<p>It’ll require a lot. </p>
<p>Australia used to have one of the lowest company tax rates in the developed world, now we have one of the highest. We tax labour income too much and consumption too little. And we have a hopelessly out of date and absurdly complex industrial relations system.</p>
<p>Each of those things are a handbrake on economic growth.</p>
<p>This is an unusual recession and an unusually deep one.</p>
<p>Digging our way out will require us to at first contain and defeat the virus, and then spend like Keynes and <a href="https://www.afr.com/policy/economy/we-can-spend-like-keynes-and-cut-taxes-like-friedman-20200728-p55g2s" target="_blank">cut taxes like Friedman</a>.<img src="https://counter.theconversation.com/content/145484/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;"></p>
<p><span><a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">Richard Holden</a>, Professor of Economics, <em><a href="https://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a></em></span></p>
<p>This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/vital-signs-how-do-you-fight-a-recession-without-precedent-145484" target="_blank">original article</a>.</p>
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j.ballantyne1990-6AQqhLzZaK

Vital Signs: How do you fight a recession without precedent?

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<p>EXPERT OBSERVER</p>
<p>The Australian economy contracted by 7% in the June quarter, broadly in line with expectations (both Westpac and market median at -6%).</p>
<p>This is by far the largest quarterly contraction in the Australian economy on record (previous record was -2.0% in June 1974).</p>
<p>However by international comparisons the contraction is relatively mild with UK (-20.3%); Europe (-12.1%); US (-9.1%); and Japan (-7.8%) all exceeding Australia’s contraction.</p>
<p>Of course these extraordinary numbers reflect the impact on activity from governments’ actions to contain the health damage to citizens from the Coronavirus.</p>
<p>As with other countries the primary impact of the containment policies was to restrict consumer spending. For Australia consumer spending represents 56% of GDP yet the 12% contraction in consumer spending explained 98% of the overall contraction in GDP. Components of consumption which were most adversely affected were: transport services (fell 86%); accommodation services (-77%); catering services (-56%); recreational and cultural services (-52%) and health (20%).</p>
<p>Household gross disposable income rose by 2.2%, largely reflecting the boost to social assistance benefits.</p>
<p>Hours worked fell by 9.8% although wage incomes declined by only 2.5%. That “gap” is explained by the JobKeeper subsidy payments which were used to maintain the wages of workers who experienced a significant reduction in hours worked.</p>
<p>With the lift in household incomes and the collapse in spending the household savings rate soared to 19.8% from 6% in the March quarter.</p>
<p>The sharper fall in hours worked relative to output points to the disproportionate job losses in the labour intensive service sectors of the economy.</p>
<p>The dominance of consumer spending in this result is generally highlighted by other components of expenditure, which were weak, reflecting the recession conditions, but not spectacularly so – business investment fell 3.5%, including a fall of 6.8% in machinery and equipment and a partly offsetting rise in infrastructure investment; residential construction fell by 6.8%; and real estate activities fell by 18.6%.</p>
<p>Nevertheless we can expect that the lags from recessionary conditions in the June quarter will continue to impact business investment and housing for the remainder of the year.</p>
<p>Exports fell by 6.7% (including a 24.6% fall in travel services and a 46.6% fall in transportation services) while imports fell 12.9% as the international border closure triggered a 98.7% fall in travel services and a 32.9% fall in transportation services. Overall net exports contributed 1.0ppt to GDP growth.</p>
<p>The growth outlook for the remainder of the year will be dependent on the success which government achieve in containing the virus.</p>
<p>On the positive side we assess that the economy had considerable momentum going into the September quarter following the 4% snap back in hours worked in June and the lift in jobs in June and July. Of course that momentum was severely impacted by the deterioration in Victoria which represents around 24% of national GDP.</p>
<p>Our current figuring points to a flat quarter overall in September to be followed by a strong recovery in the December quarter. That recovery is dependent upon our base assumptions that Victoria will move through to a Stage2 in the December quarter while other states will avoid any damaging second waves.</p>
<p>As we have seen in today’s report the governments’ support packages have played a key role in containing the impact on household incomes from the containment policies. The December quarter will – on current policy settings – see a considerable scale back in that support affecting both households and business.</p>
<p>However, as demonstrated by the spike in the savings rate, the household balance sheet is in much better shape to cope with the partial withdrawal of the government payments.</p>
<p>The upcoming Federal budget, on October 6, provides the government with another opportunity to reassess and reset policy support. The annual Budget will undoubtedly be expansionary, the question is the degree of additional stimulus and the form that takes. The bringing forward of already legislated income tax cuts is an appropriate action in the current environment.</p>
<p>Overall we expect that the net positive effect of the general reopening of the state economies on the consumer sector, including relaxation of key state border restrictions will underpin a strong recovery in the December quarter.</p>
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bevans-rYk9SxEa4r

What does the record 7% collapse in GDP mean? Bill Evans

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<p>The Australian Gross Domestic Product fell seven per cent in the June quarter, the largest quarterly fall on record, according to figures released by the Australian Bureau of Statistics today.</p>
<p>This follows a fall of 0.3 per cent in the March quarter 2020, with Australia now officially entering a recession.</p>
<p><span>The biggest quarterly contraction on record has confirmed Australia’s first recession since the 1990s and its most severe economic blow since World War II.</span></p>
<p>Head of national accounts at the ABS, Michael Smedes said, “The global pandemic and associated containment policies led to a 7.0 per cent fall in GDP for the June quarter. This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959.”</p>
<p>"The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus."</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/9/2/GDP.jpg" alt=""></p>
<p>Net trade contributed 1.0 percentage points to GDP. Imports of goods fell 2.4 per cent, with falls in consumption and capital goods reflecting weak domestic demand. Imports of services fell 50.5 per cent and exports of services fell 18.4 per cent, due to restrictions on travel and tourism.</p>
<p>Public demand contributed 0.6 percentage points to GDP, driven by health related spending by the state and local government. Defence spending also increased as personnel were deployed to assist with management of the COVID-19 pandemic.</p>
<p>The household saving to income ratio rose to 19.8 per cent from 6.0 per cent, driven by the fall in consumption expenditure. Hours worked fell a record 9.8 per cent, outpacing the record 2.5 per cent decline in wages which were supported by JobKeeper payments. Social assistance benefits in cash rose a record 41.6 per cent, due to increased number of recipients and additional support payments.</p>
<p>General government net saving fell to -$82.6 billion from $1.2 billion in the March quarter 2020.</p>
<p class="_1HzXw">CBA was one entity that was off the mark with a less pessimistic outlook than the market consensus, which was a 6 per cent contraction for the economy.</p>
<p class="_1HzXw">Commonwealth Bank economist Kim Mundy believed GDP will have fallen by 5.4 per cent in the June quarter.</p>
<p>A month ago CBA changed their forecasts, with head of Australian economics Gareth Aird saying the Melbourne lockdowns have changed their thinking.</p>
<p>They cut the GDP growth forecast to -4.2 per cent for 2020, worse than the -3.8 per cent predicted before the lockdowns.</p>
<p>"There will be a huge disparity in economic outcomes between Victoria and the rest of Australia in Q3 20", Aird said.</p>
<p>Economist Lindsey David tweeted, "That GDP report was once-in-a-lifetime."</p>
<p>APAC economist Callum Pickering said, "o<span>ver the past decade the Australian economy has expanded by just 1.7% a year on average. Adjusted for population growth and real GDP has increased by just 0.2% a year. Even before COVID-19 we had experienced a long period of relatively low growth.</span></p>
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wdavis-8cCN98p7xp

GDP plummets 7%, the largest fall ever, as Australian recession begins

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<p class="legacy"><span>We are a country that has become richer than we possibly ever could have imagined. We have had 29 years of unprecedented, </span><a href="https://www.austrade.gov.au/news/economic-analysis/australia-on-course-to-celebrate-30-years-of-growth-says-oxford-economics#note-1" target="_blank">world-record holding</a><span> economic growth.</span></p>
<p>Although economically things are a little <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2020-02-27/government-budget-surplus-threatened-by-coronavirus/12002704" target="_blank">precarious</a> in the midst of the coronavirus outbreak and our worst bushfires in recorded history, ahead of the first gross domestic product (GDP) announcement for the year, it’s worth acknowledging this remarkable achievement.</p>
<p>But what has it meant for people’s lives? The figures tell us little about <a href="https://www.theguardian.com/commentisfree/2020/feb/23/fiona-stanleys-2020s-vision-please-can-we-move-beyond-gdp" target="_blank">whether life is getting better</a>.</p>
<p>In 1991, the last time GDP went backwards for two consecutive quarters, 258,226 babies were born in Australia.</p>
<p><strong>Samantha and Andrew</strong></p>
<p>Let’s call one of them Samantha, born in Bently, an area of high socioeconomic disadvantage in Western Australia, and the other Andrew, born in the suburb of Griffith in the Australian Capital Territory.</p>
<p>During the first two years of their lives, around one in 10 families with children were in a <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/2f762f95845417aeca25706c00834efa/855e6f87080d2e1aca2570ec000c8e5f!OpenDocument" target="_blank">jobless household</a>.</p>
<p>Andrew’s parents had jobs. Samantha’s didn’t.</p>
<p>By the time Samantha and Andrew were 25, in 2016, average household disposable income was twice what it had been when they were born, even after accounting for higher prices.</p>
<p>But it’s not hard to see that, despite economic growth, their lives were different.</p>
<p>Samantha had less education, was underemployed, in housing stress and skipping meals to feed her kids. Andrew had higher education, was employed full-time, lived with high-income parents and was saving for a deposit for a place of his own.</p>
<p>While economic growth made us wealthier as a country, it hasn’t been good for all of us.</p>
<p>We need a measure that sits alongside gross domestic product that tells us whether we are actually getting better off.</p>
<h2>What matters is whether we are really better off</h2>
<p>The idea of a broader measure of social progress isn’t new – a collaboration called the <a href="http://www.andi.org.au/" target="_blank">Australian National Development Index</a> has been underway a few years now, and the Australian Bureau of Statistics used to publish “<a href="https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1370.0%7E2013%7EMain%20Features%7EAbout%20MAP%7E2" target="_blank">Measures of Australia’s Progress</a>” until budget cuts in 2014.</p>
<p><a href="https://treasury.govt.nz/publications/wellbeing-budget/wellbeing-budget-2019-html" target="_blank">New Zealand</a> introduced a “well-being budget” last year, targeting mental health, child welfare, Indigenous reconciliation, the environment, suicide, and homelessness, alongside traditional measures of productivity and investment.</p>
<p>Labor’s treasury spokesman, <a href="https://www.smh.com.au/politics/federal/measure-what-matters-labor-s-plan-to-track-the-nation-s-wellbeing-alongside-gdp-20200219-p5426n" target="_blank">Jim Chalmers</a>, has <a href="https://jimchalmers.org/media/speeches/measuring-what-matters/" target="_blank">promised</a> to do the same when Labor is next in office.</p>
<p><a href="https://amplify.csi.edu.au/social-progress-index/" target="_blank">Australia’s Social Progress Index</a>, launched last month by the <a href="https://amplify.csi.edu.au" target="_blank">Centre for Social Impact</a> at UNSW Sydney and the <a href="https://www.socialprogress.org/" target="_blank">Social Progress Imperative</a> will go further, and much further than the national accounts to be released today.</p>
<p>It will enable the well-being and opportunities to be ranked and compared by location and time.</p>
<p>The <a href="https://amplify.csi.edu.au/social-progress-index/" target="_blank">online tool</a> enables anyone to explore how we are tracking on <a href="https://amplify.csi.edu.au/social-progress-index/methodology/" target="_blank">12 components </a> grouped into three domains: basic human needs, foundations of well-being, and opportunity.</p>
<p><a href="https://images.theconversation.com/files/318218/original/file-20200303-18270-7wakux.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/318218/original/file-20200303-18270-7wakux.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a></p>
<p>Finding the components wasn’t easy.</p>
<p>We needed to consider data availability, data detail, sample sizes, and reliability. We considered more than <a href="https://amplify.csi.edu.au/social-progress-index/methodology/" target="_blank">400 possibilities</a>.</p>
<p>While it is by no means the only (or perfect) way of understanding Australian living standards, it pushes us significantly beyond GDP.</p>
<p>It asks and answers universally important questions, such as:</p>
<p>• Do people have adequate housing with basic utilities?</p>
<p>• Do people have access to an educational foundation?</p>
<p>• Are people free to make their own life choices?</p>
<p>• Is this society using its resources so they will be available to future generations?</p>
<h2>Economic growth doesn’t tell us much</h2>
<p>The results show a stark disconnect between economic and social progress. While our GDP has been rising, we have fared poorly on environmental quality and access to information and communications.</p>
<p>At a state and territory level, despite having high gross state product per capita, <a href="https://www.jtsi.wa.gov.au/docs/default-source/default-document-library/wa-economic-profile---february-2019.pdf?sfvrsn=538731c_4" target="_blank">Western Australia</a> and the <a href="https://nteconomy.nt.gov.au/economic-growth" target="_blank">Northern Territory</a> ranked 7th and 8th on most of the indicators.</p>
<p>The rising tide has not lifted all boats.</p>
<p>This is evident in Andrew and Samantha’s lives (the Australian Capital Territory ranks first overall, Western Australia 7th) and also in the aftermath of the bushfires.</p>
<p>People were cut off from <a href="https://www.theguardian.com/australia-news/2020/jan/01/australia-bushfire-towns-supplies-power-houses-the-lot" target="_blank">power</a>, information, <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/rural/2020-01-13/are-australias-telecommunication-up-to-the-new-kind-of-megafire/11860238" target="_blank">communication</a>, and <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2020-01-06/fire-cuts-food-supplies-to-nsw-south-coast-towns-and-families/11842382" target="_blank">access to resources</a>. Many <a href="https://www.health.nsw.gov.au/news/Pages/20191113_00.aspx" target="_blank">struggled to breathe</a>. We lost much of our ecosystem.</p>
<p>The economy is fundamental to improving our well-being and fuelling our social progress, but it isn’t everything and it isn’t necessarily inclusive.</p>
<p>If we had inclusive growth we wouldn’t be able to predict babies’ futures by the postcodes in which they were born. We would be able to meet basic human needs regardless of how much was spent and earned each quarter.</p>
<p>Today’s national accounts will be important, as a spur to asking other important questions, rather than as the final answer.<img src="https://counter.theconversation.com/content/132739/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;"></p>
<p><span><a href="https://theconversation.com/profiles/kristy-muir-158422" target="_blank">Kristy Muir</a>, Professor of Social Policy / CEO, Centre for Social Impact, <em><a href="https://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a></em>; <a href="https://theconversation.com/profiles/isabella-saunders-981654" target="_blank">Isabella Saunders</a>, Research Assistant at the Centre for Social Impact, <em><a href="https://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a></em>, and <a href="https://theconversation.com/profiles/megan-weier-151162" target="_blank">Megan Weier</a>, Research Fellow, <em><a href="https://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a></em></span></p>
<p>This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/todays-gdp-figures-wont-tell-us-whether-life-is-getting-better-heres-what-can-132739" target="_blank">original article</a>.</p>
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Today's GDP figures won't tell us whether life is getting better -- here's what can

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<p>GUEST OBSERVATION </p>
<p>Despite 28 years of uninterrupted economic growth, future generations of Australians face being worse off due to increasing household debt, cost-of-living pressures, rising wealth inequality, climate change impacts and environmental degradation.</p>
<p>But our <a href="https://www.nature.com/articles/s41893-019-0409-9" target="_blank">new research</a> finds a fairer, greener and more prosperous Australia is possible – so long as political leaders don’t focus just on economic growth.</p>
<p><strong>Evaluating Australia’s progress by 2030</strong></p>
<p>We modelled four development scenarios for Australia through to 2030:</p>
<ul>
<li>“Growth at all Costs”, emphasising economic growth</li>
<li>“Green Economy”, emphasising environmental outcomes</li>
<li>“Inclusive Growth”, emphasising social equality</li>
<li>“Sustainability Transition”, balancing economic, social and environmental outcomes.</li>
</ul>
<p>Each scenario involved different policy and investment settings, particularly around tax and subsidies, government expenditure and private investment.</p>
<p>We then evaluated each scenario against the <a href="https://www.un.org/sustainabledevelopment/sustainable-development-goals/" target="_blank">Sustainable Development Goals</a>, an internationally recognised set of targets and indicators that measure national progress in 17 major areas. These include economic growth, poverty, inequality, education, health, clean water and clean energy.</p>
<p><img src="https://images.theconversation.com/files/302095/original/file-20191118-66971-1ur4w7y.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></p>
<p><em><span class="attribution"><a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/" target="_blank">CC BY-NC-SA</a></span></em></p>
<p><strong>Goals, targets and indicators</strong></p>
<p>Each goal involves multiple targets and indicators. Goal 8, for example, is “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. This involves 10 targets including per capita economic growth, decoupling economic growth from environmental degradation, and protecting labour rights. Each target comes with at least one indicator (for example, the growth rate of real GDP per capita, material consumption per GDP, and the rate of occupational injuries).</p>
<p>In all, the 17 goals cover 169 targets. Because Australia has not adopted SDG targets, we chose 52 of those (with about 100 indicators) then modelled Australia’s progress in 2030 using our four scenarios.</p>
<p>The graph below shows each scenario’s score (with 0% meaning no progress, 100% target achieved) on each of the 17 goals. We also calculated an average score for each scenario across all goals to aid comparison.</p>
<p><strong>Growth alone is not the answer</strong></p>
<p>Our model projects a business-as-usual approach will achieve progress of about 40% across all goals and targets. The “Growth at all Costs’ scenario scored only slightly better: 42%.</p>
<p>Economic growth – defined as an increase in a nation’s production of goods and services – is generally measured by the annual change in real gross domestic product (GDP).</p>
<p>Our "Growth at all Costs” scenario involves accelerating economic growth through higher population growth and lower taxes. Net migration is modelled as being 350,000 a year by 2030, with the population reaching just over 30 million. The government’s tax revenue as a proportion of GDP is 10% less than now as a result of lower tax rates.</p>
<p>Government spending is about 15% less (as a percentage of GDP), with cuts particularly to health, education and social security, but more spending on transport infrastructure. There are no new measures to tackle greenhouse gas emissions, land degradation or other environmental concerns.</p>
<p>In our modelling this scenario increases GDP growth to about 2.6% a year, with low unemployment and declining government debt. But it comes at the expense of income inequality and the environment.</p>
<p>Even on the one goal it might be expected to do relatively well – Goal 8 – this scenario performs quite poorly. That’s because the goal measures per capita GDP growth, not just the total GDP growth most politicians talk about, along with a range of social and environmental indicators.</p>
<p>The following graphs show how the four scenarios compare on real GDP (i.e. adjusted for inflation), per capita GDP, income inequality and greenhouse gas emissions.</p>
<p><strong>Sustainability transition</strong></p>
<p>With an overall score of 70%, the “Sustainability Transition” scenario is the clear winner.</p>
<p>This scenario modelled slower population growth and higher taxes on consumption, income and profits and trade. With net migration of 100,000 a year by 2030, the population reaches about 28 million. Tax revenue as a percentage of GDP is about 8.5% higher than now. This funds more spending on health, education and social security, as well as the equivalent to 1% of GDP on the sustainability of transport, water, energy, agriculture and energy systems.</p>
<p>The overall result is economic growth of about 2.1% a year, with government debt 10% higher than our business-as-usual projection.</p>
<p>But per capita GDP is higher. Unemployment and income inequality are lower. Fewer people live in relative poverty, and life expectancy is higher. Energy, water and resource consumption is down. So are greenhouse gas emissions. There is more forested land. This delivers a more prosperous, fairer and greener nation in 2030.</p>
<p><strong>Possible futures</strong></p>
<p>These results run contrary to the “growth and jobs” narrative that <a href="https://www.businessinsider.com.au/heres-how-many-times-scott-morrisons-budget-speech-used-the-catchphrase-jobs-and-growth-2016-5" target="_blank">dominates political debate in Australia</a>. Both sides of politics emphasise economic growth as the key to prosperity. But this narrative is clearly flawed when we look at a broader set of issues.</p>
<p>The Sustainable Development Goals seek to capture all of these issues in a coherent way. Our study explores four plausible futures, and there are many other possible combinations that could be explored with worse or better results.</p>
<p>What is clear is that business as usual certainly won’t ensure Australia has a more prosperous, fairer and environmentally sustainable society.<img src="https://counter.theconversation.com/content/126823/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;"></p>
<p><em><strong>Cameron Allen</strong>, Researcher, UNSW.</em></p>
<p><em><strong>Graciela Metternicht</strong>, Professor of Environmental Geography, School of Biological Earth and Environmental Sciences, UNSW.</em></p>
<p><em><strong>Thomas Wiedmann</strong>, Associate Professor, UNSW.</em></p>
<p><em>This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/we-modelled-4-scenarios-for-australias-future-economic-growth-alone-cant-deliver-the-goods-126823" target="_blank">original article</a>.</em></p>
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We modelled four scenarios for Australia’s future. Economic growth alone can’t deliver the goods

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<p>EXPERT OBSERVATION</p>
<p>Australian GDP rose by 0.5% in the June quarter and annual growth slowed to 1.4%, which was right on market forecasts but below the RBA’s forecasts for a 0.8% rise in the quarter.</p>
<p>GDP growth is very weak and at its lowest level since the Global Financial Crisis (see chart below) which is why there is all the talk of a recession in Australia lately and why conditions in some pockets of the economy may feel recession-like.</p>
<p><em><a href="https://www.propertyobserver.com.au/images/2019/9/4/GDP.png" target="_blank">Click here</a> to enlarge: </em></p>
<p><img src="https://www.urban.com.au/images/2019/9/4/GDP.png" alt=""></p>
<p><em>Source: ABS, AMP Capital</em></p>
<p>The weakness in the Australian economy that started in mid-2018 has continued well into 2019.</p>
<p>The make-up of growth still remains a concern as private demand fell again in the June quarter (by 0.1%) with large increases in public spending and net exports “saving” the economy.</p>
<p>With consumer spending still struggling to lift noticeably, falling residential construction, moderate business investment growth, the private sector side of the economy will likely remain weak.</p>
<p>A softer global environment may also infiltrate further into Australia’s external sector. So the risk of an Australian recession remains and can’t be ignored.</p>
<p>However, this is not our base case partly because we expect more RBA interest rate cuts, possibly quantitative easing, and more fiscal stimulus which should help lift growth.</p>
<p>If the improvement in home prices continues it would also be positive for household wealth and provide some boost to inflation.  </p>
<p>The key components of the June quarter data are:</p>
<ul>
<li>Consumer spending rose by 0.4%, contributing 0.2 percentage points to the June quarter GDP.</li>
</ul>
<p>Consumer spending growth is still declining, with annual growth falling to 1.4%.</p>
<p>The household saving ratio declined to 2.3% (from 3%) after increasing in prior quarters.</p>
<p>While there may be some more downside to consumer spending growth due to the low wages environment, the bottoming in national home prices means that the negative wealth effect is waning.</p>
<p>Tax cuts to low and middle income earners should also have a positive boost to consumption over coming months, although the fall in July retail sales is concerning.</p>
<p>The declining household saving ratio tells us that the buffer for consumer spending is declining.</p>
<ul>
<li>Housing investment continues to decline and detracted 0.2 percentage points from GDP growth.</li>
</ul>
<p>New residential construction fell by 5.9% and alterations and additions were down by 1.4%.</p>
<p>Ownership transfer costs (a proxy for housing turnover activity) improved by 4.3%.</p>
<p>Building approvals continue to fall so there is still further downside to residential construction over the next year.</p>
<ul>
<li>Underlying business investment (which takes into account asset transfers between the private and public sector) fell by 0.4% and made no contribution to growth.</li>
</ul>
<p>Non-residential building was down by 5% and engineering construction dropped by 4.7% but is down 19.6% year on year.</p>
<p>Non-residential building approvals have been mixed over the past few months so there may be some more weakness to come for building activity.</p>
<p>The capital expenditure survey indicated that business investment growth will be positive albeit modest over the next year as mining investment is slowly improving, manufacturing investment is lifting and spending in the services industry is still trending up.</p>
<ul>
<li>Underlying government spending (which takes into account asset transfers between the private and public sector) was up strongly by 1.4% and contributed 0.3 percentage points to growth.</li>
</ul>
<p>Government consumption rose by 2.7% but investment fell by 2.3%. State and Federal government spending on infrastructure has been driving public spending over the past few years.</p>
<p>While the pipeline of projects in construction is peaking, the slow pace of project completions due to delays or other issues means that the peak in government infrastructure spending keeps on being pushed out which is a positive for GDP growth (but maybe not a positive for traffic congestion!).</p>
<ul>
<li>Inventories collapsed and detracted 0.5 percentage points from growth which means that production did not keep up with sales.</li>
</ul>
<p>The inventory to sales is at a record low of 0.581 and is unlikely to fall much further from here which means that inventories are likely to add to GDP in coming quarters.</p>
<ul>
<li>Net exports boomed and contributed 0.6 percentage points to growth.</li>
</ul>
<p>Export growth is solid which is a good sign of demand for goods and services but the collapse in imports (especially in consumption imports) is a bad sign for consumer spending.</p>
<ul>
<li>Productivity growth is still poor with the “GDP per hour worked in the market sector” flat over the June quarter and down by 0.6% over the year.</li>
</ul>
<p>Weakness in productivity growth reconciles the divergence between strong employment growth and weak GDP numbers. </p>
<p><strong>Implications</strong></p>
<p>While the RBA kept the cash rate unchanged yesterday, despite knowing the weakness in July retail sales and anticipating a low June quarter GDP number, we still expect rate cuts in October and November taking the cash rate to 0.5% as global data remains weak, the unemployment rate increases and global central banks (the ECB and Fed) cut interest rates (and restart asset purchases in Europe) in September which may influence the RBA’s decision to do more monetary stimulus lest the Australian dollar rises.</p>
<p><em><strong>SHANE OLIVER </strong>is Head of Investment Strategy and Chief Economist AMP Capital.</em></p>
<p><em><strong>DIANA MOUSINA </strong>is an Economist at AMP Capital. </em><span style="font-size: 12.16px;"> </span></p>
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