Economic growth stalls at just 0.2pc amid rates squeeze

Australia’s economy grew just 0.2 per cent in the final three months of 2023, with business investment providing a boost as households felt the impact of higher interest rates and low consumer confidence.

The rate for the December quarter matched growth also recorded for the three months to the end of September. Across 2023, the economy expanded 1.5 per cent, according to numbers released Wednesday by the Australian Bureau of Statistics.

GDP measures the level of output — and income — created in the country. A rising number means increased economic activity and drives up living standards.

“Growth was steady in December, but slowed across each quarter in 2023,” ABS head of national accounts Katherine Keenan said.

“Government spending and private business investment were the main drivers of GDP growth this quarter.”

On Tuesday, Commonwealth Bank had forecast growth of 0.2 per cent and ANZ had picked 0.3 per cent. Current account data showed strong trade figures while consumer confidence fell.

Treasurer Jim Chalmers had warned the numbers could show the nation’s economy was under pressure.

The economy has slowed after a stimulus-boosted surge in growth following COVID-19, which temporarily reduced unemployment to 50-year lows and sparked inflation peaking near 8 per cent.

But the Reserve Bank of Australia moved to bring the economy back into a sustainable balance, fighting inflation with a series of interest rate hikes that hit borrowers hard and slowed spending growth.

More to come