From Westpac this afternoon:
Net exports made a rare positive contribution to growth, adding 0.3ppts to Q2 GDP. This largely offsets a 0.4ppt subtraction from Q1 growth.
The net export outcome for Q2 fell short of expectations, reflecting disappointment on exports. (mkt median +0.6ppts, Westpac +0.8ppts)
Export volumes advanced by 2.5% in Q2, following a 0.9% decline in Q1. Import volumes rose by 0.9%, following a 1.1% increase last period.
Q2 public demand: +1.9%. Public demand spiked in Q2, ahead of the new financial year. Demand expanded by 1.9%, well in excess of our f/c of 0.5%. A return to subdued public demand growth is likely from Q3, as state and federal government’s focus on fiscal consolidation.
Implications for Q2 GDP
We’ve downgraded our f/c for Q2 GDP growth to 0.6% from 0.8%. However, we still expect annual growth to be 3.5%. We’re now less inclined to expect a downward revision to Q1 GDP growth, which originally printed at 1.3%.
