Economist at UOB Group Lee Sue Ann reviews the latest GDP release in the Australian economy.
Key Takeaways
“The Australian economy rebounded strongly in 4Q21. GDP rose 3.4% q/q, a reversal from 3Q21 (when GDP was down 1.9% q/q). Although the latest reading came slightly below expectations for a 3.5% q/q reading, it was the strongest quarterly growth in 46 years.”
“The latest GDP numbers are certainly encouraging and bode well for 2022. We now see 2022 GDP at 4.0% from 3.7% previously. The labour market has continued to improve and both international trade and domestic services spending are likely to recover with the reopening of international borders.”
“While we recognise that continued out-performance of the labour market amid a steady rise in wage growth, and further increases in inflation could prompt a more rapid normalisation of monetary policy settings; at this juncture, still look for the first rate hike in 2023. Wage and inflation prints, particularly for the upcoming March and June quarters will be closely eyed to see whether labour market strength will begin to flow through to wages.”