Treasurer Josh Frydenberg says the latest national accounts should give Australians “optimism and hope” after posting the biggest quarterly expansion since 1976.
The Australian economy has emerged from its first recession in nearly 30 years, growing by 3.3 per cent in the September quarter.
But the Treasurer warned Australia’s economic recovery still has a lot of ground to make up.
The larger than expected expansion still left the annual rate at minus 3.8 per cent after a seven per cent contraction in the June quarter, the national accounts for the September quarter released on Wednesday show.
“Australia’s recession may be over, but Australia’s economic recovery is not,” Mr Frydenberg told reporters in Canberra.
“There is a lot of ground to make up and many Australian households and many Australian businesses are doing it tough – very tough.”
Shadow treasurer Jim Chalmers said the quarterly result will be of cold comfort for a million unemployed Australians.
“This government loves the headline and they don’t want us to go beyond that to see what’s really going on,” Dr Chalmers told reporters.
“When you do that … what you discover is the same sort of stagnant wages and weak consumption and stagnant living standards which have defined the economy for most of this government’s tenure in office, which is now in its eighth year.”
AMP Capital chief economist Shane Oliver thought it was a solid result considering initial expectations were for a low or even a flat outcome when Victoria went into its stiff COVID-19 lockdown.
Even so, Dr Oliver noted the negative annual growth rate of 3.8 per cent was still bigger than any slump seen since the end of World War II.
Household spending was the main driving force behind the rebound, rising 7.9 per cent in the September quarter after the 12 per cent drop three months earlier and adding four percentage points to growth.
Conversely, international trade detracted 1.9 percentage points from growth, the largest detraction in 40 years, the Australian Bureau of Statistics figures show.
Reserve Bank governor Philip Lowe was addressing a parliamentary committee when the national accounts were released.
“The positive GDP number … is good,” Dr Lowe told the House of Representatives economic committee.
The Reserve Bank is not expecting the growth rate to return to its pre-COVID levels until the end of 2021.
“If we keep getting numbers like that it will be a bit quicker,” Dr Lowe said.
He had told the hearing before the data release he was hoping for solid growth in both the September quarter and the December quarter.
Mr Frydenberg wasn’t about to be so bold on the outlook.
“I’m not going to make a prediction about what happens in the next quarter other than to say the trend is our friend here,” he said.
“What we are seeing is improvements in a range of economic indicators.”
Business Council of Australia chief executive Jennifer Westacott says to lock in the economy’s success is to ensure Australia is competitive with the rest of world and not stuck in the slow lane.
“We are not out of the woods yet,” Ms Westacott said.
“Only through sustained private sector investment will we see new jobs created and sustained growth.”