Treasury is maintaining its forecast of economic growth of 0.8 percent for the March quarter, matching the growth in Gross Domestic Product (GDP) in the December quarter, although overly cautious households may have provided less of a boost than expected.
Treasury is maintaining its forecast of economic growth of 0.8 percent for the March quarter, matching the growth in Gross Domestic Product (GDP) in the December quarter, although overly cautious households may have provided less of a boost than expected.
The December quarter GDP rise was an improvement on 0.3 percent GDP growth in the September quarter and 0.2 percent in the June quarter, which followed five quarters of contraction.
In its monthly collation of statistics, Treasury said today that retail sales were up just 0.2 percent in the March quarter, suggesting that private consumption growth could contribute less to second quarter GDP growth than expected in forecasts provided for the Government's budget last month.
That caution has led to a reduction in debt, with consumer debt down 3.1 percent in April.
Lower than expected wage growth in the March quarter may also have dampened consumer spending, offsetting the surprise 1.1 percent fall in the unemployment rate to 6 percent during the quarter.
Improved business confidence has been in contrast to consumer sentiment, with manufacturing activity expanding strongly.
March quarter GDP data will be released on June 24.
Economists polled by Reuters forecast a 0.7 percent quarterly increase in GDP, and a 0.3 percent decline for the year.
Growing debt problems across European countries may dampen down the world economic recovery, which had been gaining momentum, Treasury said.
