ANZ Bank has this afternoon released its final preview ahead of tomorrow’s March quarter GDP release by the Australian Bureau of Statistics.
The ANZ has lowered its GDP forecast to 0.8% from 1.0% growth over the quarter, with net exports contributing most to growth.
ANZ also forecasts solid growth in national disposable income on the recovering terms-of-trade, which rebounded strongly over the first quarter on the back of the surge in iron ore prices (since reversed over the second quarter).
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From the ANZ:
After digesting the various partial indicators, we have lowered our Q1 GDP growth forecast to +0.8% q/q from the preliminary estimate of around 1% q/q. Our bottom-up expenditure-side (GDP(E)) growth forecasts by component are presented in Figure 1.
The underlying themes that we initially expected from the national accounts, however, remain unchanged. That is, domestic final demand growth is likely to have been weak again in Q1 and the traded sector contributed significantly to GDP growth.
We expect Q1 expenditure-based GDP growth to have been a little higher than our average GDP estimate, with our estimate of income-based GDP growth a little lower.
Australia’s terms of trade rose a solid 2.7% q/q in Q1. As a result, real national income – i.e. real GDP adjusted for the terms of trade – is expected to have risen by more than real GDP in Q1. Nominal GDP growth is expected to have been around 1.7% q/q and 3.4% y/y. Importantly, the prices of Australia’s bulk commodity exports, particularly iron ore, have weakened again recently.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
