This indicates growth of only 2.6 per cent from the same quarter last year.
Senior economist Guy Bruten said while this growth seems respectable, it’s significantly below the pre-GFC average growth rate of 3.5 per cent.
Mr Bruten said domestic demand is particularly concerning, with the current annual rate at -1 per cent.
The trend-quarterly growth rate, calculated by the Australian Bureau of Statistics is also weak, falling below two per cent for five consecutive quarters.
Mr Bruten said the collapse in domestic spending has been more rapid than the fall in production.
“Overall, GDP growth has been held up by a large contribution (more than two percentage points) from net exports, driven by a combination of solid exports and weak imports,” he said.
“A new growth mix versus the mining boom decade.”
Mr Bruten also noted that gross domestic income, which was perhaps a better indication of purchasing power than GDP, had also declined since the mining period.
“In the mining boom period, GDI was growing 4.4 per cent per annum, outstripping GDP growth by nearly 1.5 per cent, and was more consistent with the perceptions of a boom,” he said.
“In the last one and a half years, however, GDI growth has been running two per cent under GDP and in per capita terms, going backwards.”
Mr Bruten said that as the commodity price cycle turned, nominal GDP growth significantly dropped, falling from seven per cent to below three per cent.
As this determines tax revenue, he said it was not surprising the government is struggling to turn the budget back towards a surplus.
Mr Bruten said these figures indicate the Australian economy is facing a much tougher environment following the end of the mining boom.
He said these conditions were likely to last for some time.
“Despite stronger housing activity, consumers generally remain conservative in their attitude to spending, debt accumulation and saving.”
Mr Bruten believes fiscal policy will be tightened, leaving the Reserve Bank of Australia with the task of delivering more policy stimulus.
“So despite a weaker currency, we continue to expect rate cuts in the New Year,” he said.
