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Business Recorder
04-06-2025
- Business
- Business Recorder
Australian dollar out of gas as economy sputters
SYDNEY: The Australian and New Zealand dollars barely budged on Wednesday as domestic economic data again disappointed, adding to market wagers that interest rates will have to be cut again and perhaps soon. Figures showed Australia's economy grew just 0.2% in the first quarter, missing forecasts of 0.4% and well below the previous quarter's 0.6% increase. Analysts had already warned of downside risk after soft data early in the week, and there had even been talk the number could be negative, so the outcome was not a total shock. With growth short of the Reserve Bank of Australia's forecast of 0.5%, the central bank will likely have to again downgrade its economic outlook. The RBA has already responded by cutting rates in February and May, and even considered an outsized move in May as insurance against a tariff-induced global slowdown. 'While it's still too soon to know for sure, early signs point to an even larger drag from confidence on consumption and investment in Q2,' cautioned Ben Udy, lead economist for Oxford Economics Australia. 'The RBA will be watching closely for further signs that the weakness in activity extends into Q2 and, if that evidence continues to rack up, may opt to cut rates again in July, a little sooner than our current forecasts suggest.' Australia, NZ dollars back away from resistance, data a drag Markets imply an 80% chance the RBA will ease by another quarter point to 3.60% at its next meeting on July 8, though some analysts suspect it will instead choose to wait for first-quarter inflation figures due later in the month. Investors seemed relieved the GDP report was not even worse and the Aussie held at $0.6473, having fallen 0.5% the previous session and away from resistance around $0.6500. Support lies around $0.6447 and $0.6390. The kiwi dollar was a fraction firmer at $0.6006, after retreating 0.6% on Tuesday and off a six-month top at $0.6054. Support comes in around $0.5930 and $0.5850. The Reserve Bank of New Zealand cut its rates a quarter point to 3.25% just last week, and is far ahead of the RBA having eased by a hefty 225 basis points so far this cycle. Markets are thus wagering it will skip another cut at its July meeting and imply around a 70% chance of a move in August instead, which could be the last of the cycle.
Business Times
04-06-2025
- Business
- Business Times
Australian dollar out of gas as economy sputters
[SYDNEY] The Australian and New Zealand dollars barely budged on Wednesday as domestic economic data again disappointed, adding to market wagers that interest rates will have to be cut again and perhaps soon. Figures showed Australia's economy grew just 0.2 per cent in the first quarter, missing forecasts of 0.4 per cent and well below the previous quarter's 0.6 per cent increase. Analysts had already warned of downside risk after soft data early in the week, and there had even been talk the number could be negative, so the outcome was not a total shock. With growth short of the Reserve Bank of Australia's forecast of 0.5 per cent, the central bank will likely have to again downgrade its economic outlook. The RBA has already responded by cutting rates in February and May, and even considered an outsized move in May as insurance against a tariff-induced global slowdown. 'While it's still too soon to know for sure, early signs point to an even larger drag from confidence on consumption and investment in Q2,' cautioned Ben Udy, lead economist for Oxford Economics Australia. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'The RBA will be watching closely for further signs that the weakness in activity extends into Q2 and, if that evidence continues to rack up, may opt to cut rates again in July, a little sooner than our current forecasts suggest.' Markets imply an 80 per cent chance the RBA will ease by another quarter point to 3.60 per cent at its next meeting on July 8, though some analysts suspect it will instead choose to wait for first-quarter inflation figures due later in the month. Investors seemed relieved the GDP report was not even worse and the Aussie held at US$0.6473, having fallen 0.5 per cent the previous session and away from resistance around US$0.6500. Support lies around US$0.6447 and US$0.6390. The kiwi dollar was a fraction firmer at US$0.6006, after retreating 0.6 per cent on Tuesday and off a six-month top at US$0.6054. Support comes in around US$0.5930 and US$0.5850. The Reserve Bank of New Zealand cut its rates a quarter point to 3.25 per cent just last week, and is far ahead of the RBA having eased by a hefty 225 basis points so far this cycle. Markets are thus wagering it will skip another cut at its July meeting and imply around a 70 per cent chance of a move in August instead, which could be the last of the cycle. REUTERS
Sky News AU
03-06-2025
- Business
- Sky News AU
GDP to ‘fall again' in March quarter economists, banks warn after Australia broke 21 month long per capita recession
Australia could be heading back into per capita recession territory as many leading economists downgrade their gross domestic product projections. The nation was in a per capita recession - consecutive quarters where population growth outpaced economic growth - for 21 months before the economy picked up in the December 2024 quarter. Growth is expected to sink once again in the March quarter in the new figures from the Australian Bureau of Statistics due 11.30am. Oxford Economics Australia lead economist Ben Udy said the consultancy firm had downgraded its GDP projection from 0.5 per cent to about 0.2 per cent after it was revealed Aussies were spending less than expected. Mr Udy also pointed to other key data from the ABS, including government consumption, retail sales and trade, which suggested Australia could be headed back towards a per capita recession territory. 'There's no question that on a per capita basis, the activity is pretty soft at the moment,' he told He added Australia was already experiencing a hit from a reduction of international students - one of the nation's major exports. 'One thing in today's trade balance of payments data was that exports of services were a little lower,' Mr Udy said. 'In particular, exports of education services suggesting reductions in student numbers may already be starting to have an effect on Australia's exports.' It comes as student placement and English language testing business IDP Education suffered a devastating 48 per cent share price drop on Tuesday after the company forecasted its earnings would halve. The nation's GDP slump was also a concern for Economics Unchained's principal Stephen Halmarick, who warned Australia's economy was headed back into per capita recession territory. 'It looks like the first quarter of GDP numbers are going to be pretty soft, maybe around 0.2-0.3 per cent for the quarter,' he told Sky News Business Now. 'That's slower than the fourth quarter of last year, which was 0.6 per cent. This very subdued economic environment that we've had for a number of years now (continues). 'Perhaps more importantly, the GDP per capita number is likely to fall again. 'We've seen this big decline in GDP per capita over the last two or so years. So (we're seeing) an environment where economic growth continues to be pretty modest.' Meanwhile, the Commonwealth Bank of Australia downgraded its forecast from 0.4 per cent quarterly growth to 0.3 per cent for March. 'With population rising by 0.4 per cent (during the quarter), that indicates a soft start to 2025 after the relative strength seen at the end of last year,' a CBA report read. Westpac predicts just 0.1 per cent quarterly growth in March, while the Organisation for Economic Co-operation and Development downgraded Australia's 2025 growth from 1.9 per cent to 1.8 per cent. Judo Bank's chief economist Warren Hogan also predicted Aussies will see the economy has slumped in March. 'We're going to get a picture painted of a soft domestic economy,' Mr Hogan said on Tuesday. 'Consumer spending (has been) soft, business investment (has been) soft even the numbers today on government spending investment and consumption were soft.' Australia experienced the slowest annual growth outside of the pandemic since the early 1990s recession in September when the economy grew 0.8 per cent.
West Australian
03-06-2025
- Business
- West Australian
Further signs Australia's GDP is set to slump
An unexpected fall in Australia's current account balance has become the latest economic indicator to suggest a sluggish national economy. While the drag was modest, Australia's current account balance rose by $1.7bn for the first three months of 2025 to an overall deficit of $14.7bn. This was larger than a forecast estimate of $12.5bn. Oxford Economics Australia lead economist Ben Udy said Tuesday's current account balance released by the Australian Bureau of Statistics was just another sign of a slowing economy. 'The modest drag from net trade along with recent downbeat GDP particles paints a sombre picture for tomorrow's GDP reading,' he said. The decline in the current account balance was largely driven by a fall in the Australian dollar, as net primary income lifted in Q1. The trade balance changed little in the quarter, as a small improvement in the balance of goods was offset by a $0.2bn fall in the goods and services surplus. ABS head of international statistics Tom Lay said there was mixed news for commodities. 'Commodity price falls, notably coal, led to Australian mining businesses seeing lower profits flow to foreign direct investors, which reduced Australia's income outflows,' he said. But the price of gold rose sharply in the first three months, leading to exports of goods to lift by 2.9 per cent following a 2.3 per cent rise in the last quarter. This was the first consecutive growth in exports since the June 2022 quarter. The March rise was led by non-monetary gold, with more gold being exported and prices continuing to rise from previous highs in the December 2024 quarter. 'The $4.8bn rise in non-monetary gold exports was the highest on record. It was led by $11bn of non-monetary gold exports to the USA, which was larger than the total combined value of non-monetary gold exports to the USA over the past four years,' Mr Lay said. Without the gold contribution, goods exports would have fallen by 1 per cent in the March quarter. Separate business indicator data also released by the ABS painted a similar picture with company gross operating profits falling 0.5 per cent for the March quarter on the back of a weaker mining sector. Company gross operating profits also fell by 6 per cent. The current account balance also showed exports of services fell 1.7 per cent this quarter, with a 2.8 per cent fall in travel services. Education-related travel exports also declined in the March quarter. 'Cost-of-living pressures and global uncertainty still appear to be weighing on households' travel plans, with both exports and imports of travel services declining in the quarter,' Mr Udy said.
Perth Now
03-06-2025
- Business
- Perth Now
‘Sombre picture': Bleak forecast for economy
An unexpected fall in Australia's current account balance has become the latest economic indicator to suggest a sluggish national economy. While the drag was modest, Australia's current account balance rose by $1.7bn for the first three months of 2025 to an overall deficit of $14.7bn. This was larger than a forecast estimate of $12.5bn. There are further signs of Australia's economy weakening. NewsWire / Nicholas Eagar Credit: NewsWire Oxford Economics Australia lead economist Ben Udy said Tuesday's current account balance released by the Australian Bureau of Statistics was just another sign of a slowing economy. 'The modest drag from net trade along with recent downbeat GDP particles paints a sombre picture for tomorrow's GDP reading,' he said. The decline in the current account balance was largely driven by a fall in the Australian dollar, as net primary income lifted in Q1. The trade balance changed little in the quarter, as a small improvement in the balance of goods was offset by a $0.2bn fall in the goods and services surplus. ABS head of international statistics Tom Lay said there was mixed news for commodities. 'Commodity price falls, notably coal, led to Australian mining businesses seeing lower profits flow to foreign direct investors, which reduced Australia's income outflows,' he said. But the price of gold rose sharply in the first three months, leading to exports of goods to lift by 2.9 per cent following a 2.3 per cent rise in the last quarter. Aussies are holding back on international travel NewsWire / Dylan Coker Credit: NewsWire This was the first consecutive growth in exports since the June 2022 quarter. The March rise was led by non-monetary gold, with more gold being exported and prices continuing to rise from previous highs in the December 2024 quarter. 'The $4.8bn rise in non-monetary gold exports was the highest on record. It was led by $11bn of non-monetary gold exports to the USA, which was larger than the total combined value of non-monetary gold exports to the USA over the past four years,' Mr Lay said. Without the gold contribution, goods exports would have fallen by 1 per cent in the March quarter. Separate business indicator data also released by the ABS painted a similar picture with company gross operating profits falling 0.5 per cent for the March quarter on the back of a weaker mining sector. Company gross operating profits also fell by 6 per cent. The current account balance also showed exports of services fell 1.7 per cent this quarter, with a 2.8 per cent fall in travel services. Education-related travel exports also declined in the March quarter. 'Cost-of-living pressures and global uncertainty still appear to be weighing on households' travel plans, with both exports and imports of travel services declining in the quarter,' Mr Udy said.
