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Australia’s economy growing at slowest rate since the GFC

SYDNEY, AUSTRALIA - OCTOBER 04:  Commuters stand at a pedestrian crossing holding umbrellas on October 4, 2018 in Sydney, Australia. Sydney is expected to have its wettest day in three months whilst Australia had its driest September on record last month, with an average rainfall of just 5 millimetres.  (Photo by James D. Morgan/Getty Images)
SYDNEY, AUSTRALIA - OCTOBER 04: Commuters stand at a pedestrian crossing holding umbrellas on October 4, 2018 in Sydney, Australia. Sydney is expected to have its wettest day in three months whilst Australia had its driest September on record last month, with an average rainfall of just 5 millimetres. (Photo by James D. Morgan/Getty Images)

The Australian economy grew 0.4 per cent in the March quarter of 2019 taking it to 1.8 per cent growth over the last 12 months, the slowest we’ve seen since the September quarter of 2009 at the end of the GFC.

Although the latest figures from the Australian Bureau of Statistics (ABS), showed the March quarterly growth of 0.2 per cent to be up from the December quarter, it was still under market expectations.

Weak household consumption dragged the figure down, contributing only 0.1 percentage points to the March quarter, affected by weak income growth and falling house prices across the nation.

Meanwhile, property investment also dragged on growth, with the slowing housing market resulting in “falls in ownership transfer costs, particularly stamp duty,” according to a statement by the ABS.

Australia’s weakening economy is the reason why the Reserve Bank of Australia slashed the official cash rate yesterday to a new record low of 1.25%.

A lower cash rate is aimed at bringing down the interest on mortgage repayments in a bid to boost consumer spending and lift the economy.

Government spending was the main contributor to the quarterly economic growth at 0.2 percentage points, reflecting the ongoing delivery of disability, health and aged care services.

Additionally, an increase in exports also contributed 0.2 percentage points to GDP growth in the March quarter.

“The economy continues to grow as we head towards twenty eight years of sustained growth,” said ABS chief economist Bruce Hockman.

“The Australian economy continues to grow but more slowly than our long term average of 3.5 per cent,” he added.

–with wires

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