(Australian Associated Press)
Treasurer Josh Frydenberg says the latest growth figures show the Australian economy continues to defy those who want to talk it down, as the government puts together a financial package in the face of the ever-spreading coronavirus.
Responding to the national accounts for the December quarter, the treasurer warned the impact of the bushfires will be felt in figures for the first three months of this year and that the coronavirus’ effect is “serious and ongoing”.
The national accounts released by the Australian Bureau of Statistics on Wednesday showed the economy grew by 0.5 per cent in the December quarter, slightly above the 0.4 per cent forecast by economists.
Revisions to previous quarters also helped the annual growth rate step up 2.2 per cent from an originally reported 1.7 per cent as of the September quarter.
“This puts to rest the claim by some that the Australian economy was softening at the end of last year,” Mr Frydenberg told reporters in Canberra.
“The Australian economy remains resilient and continues to defy all those who seek to talk it down.”
However, the annual growth rate does remain below its long-term average of 2.7 per cent.
Shadow treasurer Jim Chalmers insists growth was slowing heading into year-end and before the outbreak of the coronavirus, given the September quarter was slightly stronger after revisions at 0.6 per cent growth.
Some economists believe there could be a negative result when the March quarter national accounts are released in early June.
Dr Chalmers said there are “well-founded” expectations growth will be weak in the present quarter.
“There has been serious challenges in the economy this quarter,” he told reporters.
Mr Frydenberg said the data shows the bushfires did not have a significant effect on the national accounts in the December quarter, even though it had a devastating impact on communities.
“Most of the economic effect of the bushfires is expected to be felt in the March quarter,” he said.
“The impact of the coronavirus is serious and is ongoing and is affecting economies the world over.”
The treasurer, prime minister and the finance minister along with officials are putting together a package to support business and jobs through the COVID-19 crisis, which Mr Frydenberg said will be announced in the next few days.
“Certainly there is a need for something to be done,” Dr Chalmers said.
“The question is whether the government has left things for too long.”
The Reserve Bank of Australia on Tuesday cut the cash rate by 0.25 per cent to a record low 0.5 per cent, pre-empting the financial impact of COVID-19.
Financial markets see a strong chance of another reduction when the central bank board meets in April after the US Federal Reserve unexpectedly cut its key rate by 0.5 per cent overnight.
Mr Frydenberg said he and officials from Treasury will be talking to the International Monetary Fund later on Wednesday for an update on the spread of the coronavirus and its global economic impact.
“Treasury will finalise tomorrow morning their estimate of the impact on the March quarter and the Treasury secretary Steven Kennedy will talk to that number at Senate estimates,” he said.
Dr Kennedy and his Treasury team are due to face the Senate economics committee on Thursday morning.