By the end of this week Australians will know whether the country has avoided a recession and what Treasury’s views are about the outlook and the state of the budget.
The national accounts for the December quarter 2016 are released on Wednesday.
In the September quarter, the economy unexpectedly contacted by 0.5 per cent, the worst performance since the 2008-2009 global financial crisis.
The decline was blamed on a number of one-off, weather-related events, as well as the political uncertainty generated by the July 2 Australian federal election, the fallout from the UK’s Brexit vote and the run-up to the US presidential election.
The Turnbull government, the Reserve Bank and economists expect the economy to have bounced back in the December quarter, avoiding a second quarterly decline which would constitute a technical recession.
“Our view at the time was that the fall was a temporary aberration rather than the start of something more sinister,” Commonwealth Bank chief economist Michael Blythe says.
“Certainly the occasional negative is not unusual in long-running expansions.”
A positive result would mean Australia is still on course to complete over 26 years of uninterrupted expansion by the end of this year, beating the present record held by the Netherlands.
At this stage, economists expect the economy grew by 0.7 per cent in the quarter, but it would still leave the annual growth rate at a limp 1.9 per cent.
They will finalise their forecasts after the release of quarterly company profits and inventory figures on Monday and international trade and government spending data on Tuesday.
Treasury secretary John Fraser and his economic team will also face a Senate hearing on Wednesday.
Members of the Senate economics will no doubt quiz Treasury on the economic outlook and the state of the budget, and what impact soaring commodity prices will have on the bottom line.