Despite rapid GDP growth, Australia recorded a checking deficit of $52.4 billion in 2024. This is the best since 2016.
Australia’s economy shows signs of rebound, with new data from the Australian Bureau of Statistics (ABS) revealing a 0.6% increase in gross domestic product (GDP) for the last quarter.
Annual GDP growth reached 1.3%, improving from 0.8% in the previous period.
The latest figures show that both public and private spending have contributed to growth, along with boosting exports.
For the first time in almost two years, per capita GDP rose by 0.1%, but a modest increase.
In the nominal terms, GDP rose 1.6%, reflecting rising domestic prices and strengthening trade terms.
Labor costs have boosted the prices of services, including accommodation, airfares and rent.
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Meanwhile, the trade terms, where export values are measured against imports, rose 1.7%, marking the first increase after three consecutive declines.
Treasurer welcomes rebounds, and the opposition calls it mikiro
Treasurer Jim Chalmers welcomed the numbers, saying it showed the economy was “turning the corner.”
“Inflation is declining, revenue is strengthened, unemployment is very low, interest rates are falling, growth is rising. This is a solid rebound,” he said.
However, Shadow Treasurer Angus Taylor previously criticized the Albanese government’s economic management.
“If the worker’s plans continue, whether it’s standard of living, productivity or real wages, Australians will be poor for 10 years,” he said in February.
“If we can’t manage our economy, we can’t manage our living crisis. The only way to get back on track is to elect a coalition government that will restore prosperity, beat inflation and grow the next generation of economies.”
Chalmers said turnarounds are important compared to those inherited by workers.
“When we came to the government, our actual revenues had been retreating by 1.6%,” he said. “There is a good reason to be more optimistic in 2025 given the way we encourage our economy to end in 2024.”
Trade and consumer spending drives growth
Australia’s export sector played a major role in economic growth, contributing 0.2 percentage points to GDP growth in the December quarter.
Export prices rose 2.5%. This was driven primarily by China’s economic stimulus packages, increasing demand for Australian minerals. Prices for liquefied natural gas (LNG) and agricultural products are also rising, reflecting strong global demand.
However, import prices rose slightly due to the weakness of the Australian dollar.
Household expenditures have risen by 0.4%, supported by strong furniture sales (1.9% increase) and clothing (1.2% increase), driven primarily by Black Friday and Cyber Monday sales.
Restaurants and hotels received a 1.5% boost supported by major sporting and music events. Intrinsic spending also increased, with healthcare increasing by 1.5%, and summer heat in New South Wales and Victoria increased the costs of electricity and gas by 1%.
Government spending increased by 0.7%, with investment in health, education and police. Defense spending has recovered after two weak quarters.
Wages and savings see an increase
The labor market is strong, with employee compensation rising by 2%. By December, unemployment had tightened to 4% and working hours had risen by 0.7%, surpassing the long-term average.
The rise in wages has increased household disposable income by $5.9 billion, and the household-to-income ratio has increased from 3.6% to 3.8%. With income growth outweighing spending, households saw some easing from rising costs.
Although the data points to a steady recovery, challenges remain, including high cost of living and uncertainty in the global market.
Australia’s biggest deficit since 2016
Despite rapid GDP growth, Australia recorded a checking deficit of $52.4 billion in 2024. This is the best since 2016.
In the December quarter alone, the deficit was $12.5 billion, but a slight improvement from the previous quarter.
The Treasury’s Medium-Term Economic and Fiscal Outlook (MYEFO) projected a $26.9 billion deficit falling over the fiscal year.
However, over the next four years, the compound deficit is expected to reach $143.9 billion, a $21.8 billion worse than previous forecasts.
Australia’s trade surplus increased from $3.7 billion to $7.5 billion, driven by strong iron ore, gold and agricultural exports. However, increased payments to foreign investors offset these profits, boosting the net major income deficit to $19.8 billion.
In December, John Humphries, the chief economist of Australia’s Taxpayers’ Union, denounced excessive government spending due to a deterioration in finances.
“The deficit on 2023/24 has swelled from $29 billion to $47 billion, primarily due to discretionary spending, including the government’s commitment to partially repaying university fees for graduates,” he said.
