Today’s GDP numbers were positive. They showed that growth has picked up and that Australia’s great rebalancing act is underway. GDP rose by +0.8% in Q4 to be +2.8% higher y-o-y (market had +2.5%). Mining investment fell in the quarter, but this was more than offset by a rise in household consumption and exports. Overall domestic demand picked up and the household saving rate has started to fall. More timely indicators suggest this rebalancing of growth has continued into Q1 2014, with business conditions and housing activity rising further. We expect the RBA to remain on hold for now, but for rates to rise before year-end.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
