The Australian economy has grown 1.5 per cent in 2023-24, the weakest annual growth (excluding the Covid pandemic) since 1991-92.
According to the Australian Bureau of Statistics (ABS), the weak growth reflects subdued household demand, which detracted 0.1 percentage points from GDP growth while government consumption contributed 0.3 percentage points, the same contribution to growth as previous quarter.
Anneke Thompson, Chief Economist at CreditorWatch, said the June quarter GDP results will likely comes as no surprise to Australian business owners, particularly those selling discretionary goods and services.
“GDP per capita has now fallen for six consecutive quarters. A fall in real national disposable income over the March quarter accelerated over the June quarter, with this measure falling by 0.9 per cent.
“Not only do households have less to spend – which is absolutely being felt by retailers across the country – they do not have much to save, with the household saving ratio the lowest it has been since 2006/07, at a mere 0.9 per cent on an annual measure.”
Thompson said that these results point to continued pain for Australian businesses.
“Given today’s figures, it is highly unlikely a recovery in consumer spending will be apparent until some interest rate relief is provided to household and business borrowers, who are bearing all of the economic pain that higher interest rates cause.”
CreditorWatch’s measure of average value of invoices was half that in July 2024 compared to July 2023.
“This highlights the dramatic slowdown in business activity across Australia and is resulting in increasing insolvency rates and business failures across the business landscape. Many businesses, particularly those with low cash reserves and high-cost bases are finding conditions extremely challenging given the softening demand in many areas of the economy.
“The annual insolvency rate is now well above pre-COVID levels and has been on a sustained increase since mid-2022. We expect the average insolvency rate to continue to increase well into 2025.”
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