Business

GDP growth beats expectations, but who benefits most as profits outpace wages?

Australia’s economic growth beat analyst forecasts over the first few months of the year, but there is evidence the benefits are being felt more by business owners than workers.

The Australian economy grew 0.8 per cent in the March quarter and 3.3 over the past year, according to the National Accounts data from the Australian Bureau of Statistics.

Economists surveyed by Reuters had typically been expecting quarterly growth of 0.5 per cent and 2.9 per cent over the year to March 31.

The biggest contributors to the better-than-expected result were:

  • a rise in inventories as businesses restocked following supply chain disruptions (+1 percentage point)
  • household consumption (+0.8 of a percentage point)
  • government spending (+0.6 of a percentage point).

The biggest drag on the economy was a surge in imports — which subtracted 1.7 percentage points from GDP — as some COVID-related supply bottlenecks eased and businesses restocked.

The ABS noted that the first three months of this year saw the biggest jump in imports since the December quarter of 2009.

‘Consumers happy to get out there and spend’

The rise in government spending was largely driven by health costs as the Omicron wave of COVID-19 hit Australia in earnest.

But, despite disruptions from both Omicron and bad weather in Australia’s east, travel, recreation and eating out dominated the 1.5 per cent rise in household spending.

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