Australia: Q3 GDP reaches the third-largest drop on record – UOB

Lee Sue Ann, Economist at UOB Group, reviews the recent release of the Q3 GDP in the Australian economy.

Key Takeaways

“The Australia economy saw its third biggest fall on record in 3Q21, on the back of shutdowns across New South Wales, Victoria and the Australian Capital Territory during the period. GDP contracted 1.9% q/q, a major downturn from 2Q21 (when GDP rose a revised 0.7% q/q). Still, the latest reading came in better than expectations for a -2.7% q/q reading. From a year earlier, the economy expanded by 3.9% y/y, higher than an estimated 3.0% y/y increase, but significantly lower from last quarter’s revised reading of 9.5% y/y (9.6% y/y previously).”

“The latest GDP numbers were much better than expected, placing the economy in a better position for a recovery ahead. As this juncture, we look for a rebound in 4Q21 as major states proceed with reopening plans, which will allow economic activity to recover. We expect 4Q21 growth of around 1.5% y/y (+1.8% q/q), which will see full-year GDP for 2021 at 4.0%. However, the emergence of the new COVID-19 Omicron variant could potentially start taking a toll on the global outlook. This will not only pose a risk to the economic outlook for 2022, and also a need for patience on policy normalisation.”