Westpac calculates the following:
Export earnings rose by around 12% in Q4, of which about 10% is due to higher prices and around 2% from increased volumes.
Imports increased by around 1.5% in the quarter, reflecting higher volumes and broadly flat prices.
Our initial calculations indicate that real net exports made a very small positive contribution in Q4, of 0.1ppts, matching our forecast.
This is an improvement on the past two quarters when net exports surprised by making small negative contributions, of -0.1ppts in Q2 and -0.2ppts in Q3.
That’s not very much support for Q4 GDP. Other dimensions include:
- business investment still under huge pressure from the Gorgon wind down, certain to be very negative;
- retail suggests consumption was OK leading into Xmas but pretty ordinary during it so a smallish contribution;
- business profits and wages will be positive on the terms of trade jump;
- government consumption and investment could go either way;
- inventories have been reasonable so could fall.
There is one final point to make. In making its adjustments the ABS often shifts results from one quarter to the next. It’s possible that some components that were very weak in Q3 could be revised up and some of the weakness be adjusted to Q4.
The odds still favour a muted Q4 growth rebound but a recession of two negative quarters is quite possible.
Not that it would matter much. We all know conditions are pretty lousy. The biggest victim would be Do-nothing Malcolm and his real estate Treasurer who would be branded for life.
