Economy grows on the back of government spending

The Australian economy grew 0.4 per cent in seasonally adjusted chain volume terms in the March quarter 2019, according to figures released by the Australian Bureau of Statistics (ABS). 

The growth was spurred by government spending, reflecting ongoing delivery of services in disability, health and aged care, the ABS said. 

Household spending slowed and contributed a modest 0.1 per cent to growth reflecting reduced spending on discretionary goods such as furnishing and household equipment, recreation and culture and hotels, cafes and restaurants. 

Dwelling investment continued to detract this quarter. The slowing housing market has resulted in significant falls in ownership transfer costs, particularly stamp duty. 

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

This week, the Reserve Bank cut the official interest rate to a record low, which is forecast to help make further inroads into the spare capacity in the economy. Only two of the four big banks have passed on the cut in full.