Macroeconomic weekly round up: Australia's poor growth and optimism in India
Jason Walls breaks down the week's biggest news in macroeconomics on NBR Radio, and on demand on MyNBR Radio.
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Scrutiny Week
Australia’s economic dependence on China was highlighted this week, as its terms of trade decreased 3.4% as China reported its official factory gauge at the lowest levels in three years.
This has sparked concerns of a recession in Australia, as China’s economy continues to slowdown.
NBR reporter Jason Walls says Australia’s weak GDP growth figure this week added to these concerns.
The economy expanded just 0.2% in the second quarter of 2015, a sharp reduction on a 0.9% increase in the first quarter this year.
“It’s important to keep in mind a recession by the book is two consecutive quarters of negative GDP growth,” he says.
Harbour Asset Management’s director of fixed income Christian Hawkesby says he doesn’t think Australia is about to enter a recession.
He says this is a transition that has probably taken longer than people initially expected but there are still pockets of good things happening in the economy.
Australia has taken a major hit from the commodity price downturn, of which oil prices have taken a beating.
This week US crude was at almost $50 a barrel on Tuesday, plummeting all the way to $43 a barrel a day later, only to rebound to $46 later that day.
This volatility has rippled across economies all over the world.
Despite the downturn in China, India looks to be performing economically quite well.
“The country is expected to remain the fastest growing major economy for a second straight quarter,” Mr Walls says.
Economists put India's gross domestic product at 7.4% in Q2, just below 7.5% in January-March.
If accurate, Mr Walls says this would put India’s GDP growth rate above China’s.
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NBR Radio
Fri, 04 Sep 2015
Fri, 04 Sep 2015
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Macroeconomic weekly round up: Australia's poor growth and optimism in India
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