Growth slump
Australia's economy has had quite a tailwind from high commodity prices through the past few years, and even now the terms of trade remain quite elevated versus historic norms.
While gold prices have been exceptionally strong, looking ahead the outlook for Australia's terms of trade seems sketchier.
In nominal terms, Australia's GDP hit a record high of around $700 billion in the March quarter.
Of course, if you haven't been living under a rock, you'd know that we've experienced a fairly painful burst of inflation over recent years, and at the same time there's been a huge rebound in immigration.
Today's figures implied population growth over the year to March of around 1.7 per cent, which is almost back down to the average for the past decade of 1.6 per cent.
Government spending and public demand has generally held the economy together, but slowed in early 2025 and subtracted from growth this quarter.
As such, although real GDP increased by (a meagre) 0.2 per cent in the March 2025 quarter, in per capita terms the economy went backwards again by -0.2 per cent.
The economy is barely growing.
In fact, over the past 11 quarters, GDP per capita has gone backwards by -1.7 per cent, the sort of adverse outcome we haven't seen for more than four decades.
Payback time for the lockdowns and border closures...
Households save
One welcome dynamic for households is that they'll be paying less mortgage interest over the next couple of years, and this has just begun to flow through in the early part of 2025.
To date, at least, households appear to be saving rather than spending the difference.
The wrap
Central bank forecasts had anticipated a fairly sluggish economy, but these figures were even softer than expected, and as such markets expect a further interest rate cut to be delivered in July.
Although growth has been fairly dire, it was good to see a return to solid household disposable income growth this quarter, and households will look forward to lower mortgage payments as the year progresses.
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