If economists are right, Wednesday’s national accounts will provide Treasurer Jim Chalmers with plenty of ammunition for another crack at the former Coalition government.
After six weeks of campaigning on its economic management and a strong economy, the latest growth figures look set to fall well short of what former prime minster Scott Morrison and his team were spruiking.
The impact of the COVID-19 Omicron variant and floods along Australia’s east coast are expected to have taken the momentum out of the economy after its strong recovery in late 2021 from the Delta variant disruptions.
“It was a rocky start to this year as further disruptions hit activity,” Westpac senior economist Andrew Hanlan said.
But he does expect stronger results in the June and September quarters, before there is a loss of momentum in the final three months of the year as rising interest rates from the Reserve Bank of Australia start to bite.
Growth down and falling
At this stage economists are predicting the economy grew by just 0.5 per cent in the March quarter, which will see the annual rate retreat to 2.8 per cent from 4.2 per cent as of December.
There was a wide range of forecasts for the quarter, from flat to a two per cent rise.
While retail spending steadily grew in the March quarter, both business investment and construction work proved weaker than expectations in figures released last week.
Economists will finalise their growth forecasts after the Australian Bureau of Statistics releases quarterly figures for business profits and inventories, government finance and international trade on Tuesday.
The latter is expected to show a big 1.4 percentage point drag on the growth result from net exports figures based on monthly trade outcomes.
There is also a flurry of fresher monthly figures over the week, kicking off with building approvals on Tuesday, which are expected to stabilise with a modest 0.5 per cent rise after sharp double-digit swings in recent months.
Eyes on consumer confidence
Also on Tuesday, the weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – will capture the initial response to the election of a Labor government for the first time in almost a decade.
Other data includes the CoreLogic home value index for May on Wednesday, which economists are expecting to show a 0.3 per cent fall as the recent decline in house prices in Sydney and Melbourne broadens.
Meanwhile, Australian shares look set for a positive start to the week after Wall Street closed sharply on Friday and ahead of Monday’s US holiday for Memorial Day.
Signs of slowing growth in the US fanned hopes the Federal Reserve many not need to be raise interest rates by as much as previously feared with home sales falling for a third straight month.
It saw all three major US stock indexes end their longest weekly losing streaks in decades.
The Dow Jones Industrial Average rose 575.77 points, or 1.76 per cent, to 33,212.96, the S&P 500 gained 100.4 points, or 2.47 per cent, to 4158.24 and the Nasdaq Composite added 390.48 points, or 3.33 per cent, to 12,131.13.
On Friday, the Australian benchmark S&P/ASX 200 index finished up 76.8 points, or 1.08 per cent, to 7182.7, but again failed to crack the 7200-mark.