Stephen Koukoulas - All Eyes On GDP
Next week is a busy one with the RBA meeting one highlight – the other is the release of the much-anticipated March quarter GDP result. Just how strong, or weak, was the economy at the start of 2017?
The general market view is that GDP growth for the quarter will be around 0.2 per cent. This is not a good result in anyone’s language as it would mean that the annual rate of GDP growth will have dropped back to around 1.7 per cent (depending on revisions). Assuming a 0.2 per cent growth rate, it will also mean that the quarterly pattern of -0.5 per cent, 1.1 per cent and then 0.2 per cent will leave average quarter GDP around 0.3 per cent which annualised is a frankly dismal 1.2 per cent. In very simple terms, the economy is not growing all that fast at present which is a point reinforced by the record high underemployment, relatively high unemployment, falling real wages and persistently low underlying inflation.
This will be something the RBA Board will no doubt mull over and it should see the RBA moving to a more dovish view on interest rates.
The Constant Investor is the new home of Alan Kohler, founder of Eureka Report and the ABC's finance presenter. Join to receive - Kohler's Weekly Overview, exclusive stock tips, investment ideas, podcasts and much more. Click here to learn more.