Key facts
- Australia's annual economic growth slowed to 2.1% in the year ending June.
- Quarterly GDP grew by 0.4% in the June quarter.
- Household spending on electric and hybrid vehicles significantly contributed to consumption growth.
- International travel spending declined due to the Middle East conflict and increased airfares.
- GDP per capita contracted by 0.1% in the June quarter.
- Labor productivity saw no growth in the June quarter and declined year-on-year.
Australia's economy grew by 2.1% in the year to June, a slowdown from 2.5%, with quarterly GDP expanding by 0.4%, according to figures from the Australian Bureau of Statistics. While the economy is softening, it is not collapsing, with Treasurer Jim Chalmers describing the result as robust given challenging international circumstances.
Household spending was supported by a 0.6% rise in disposable incomes, largely insulated from global events like the Middle East conflict. However, international travel declined for the first time since the pandemic, attributed to the conflict and higher airfares. Instead, consumers splurged on fuel-efficient and electric vehicles, which accounted for three-quarters of the quarterly consumption growth. Experts noted that without this spending, overall consumption would be too weak.
The national accounts also revealed that economic expansion is primarily driven by population growth, not productivity. Real GDP per person contracted by 0.1% in the June quarter and was flat in the previous quarter. Labor productivity, measured as real GDP per hour worked, was flat for the quarter and down 0.2% year-on-year, raising concerns about living standards.