What the slowdown in Australia’s GDP growth means for you
Australia’s GDP data has been released, with weak figures putting our nation close to recession. Here’s what the troubling numbers mean for wages, mortgages, savings and more.
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Australia’s slowest annual GDP growth in 10 years puts us closer to a recession than we’ve been since the Global Financial Crisis, although the dreaded R word still appears unlikely.
However, a weaker economy can still impact many parts of our daily lives. Here’s a glance.
YOUR JOB
Slow economic growth is bad for business and is more likely to lead to job cuts rather than employers hiring extra staff.
YOUR TAXES
The latest GDP data, for the three months to June 30, does not reflect the tax cuts flowing to millions of workers since July. If the economy worsens, the government might try to stimulate it more with bigger tax cuts.
YOUR HOME LOAN
Mortgage interest rates are already at record lows, and an economic slowdown keeps them lower for longer.
YOUR SAVINGS ACCOUNT
The flip side of low mortgage rates is low interest rates paid on term deposits and other savings accounts. They, too, will stay down.
YOUR WAGE
Wages growth in Australia has been anaemic, and a weaker economy is more likely to keep it that way rather than prompt bosses to pay more.
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SHARES
When companies don’t increase their profits because the economy is weak, share prices don’t rise. This means shareholders shouldn’t expect big gains any time soon.
PROPERTY
Property prices might slump in a major economic downturn, but are generally more affected by long term housing market cycles and supply and demand issues. Weaker housing construction was one of the contributors to the latest sluggish GDP data.
YOUR SUPERANNUATION
A majority of our super fund accounts contain shares — often more than a third is invested in Australia’s sharemarket. If shares fall, super could take a hit, but diversification by most funds helps limit the losses.
YOUR HOLIDAYS
Heading overseas? Consider avoiding places where the US dollar is transacted, with our currency hitting 10-year lows below US67c this week. If our economy stays weak and interest rates stay low, don’t expect to have more foreign purchasing power any time soon.
YOUR HOUSEHOLD
Australians are world record holders when it comes to avoiding recessions — which are measured by two quarters (six months) of negative GDP figures. We’ve gone 29 years without one, which has been great for households.
Some economists believe our economic growth has now bottomed out and will improve over the year ahead, stretching our record even further.