How Australia’s economy is faring – in five charts

The Australian economy expanded by a subdued 0.2 per cent through the final three months of 2023, taking annual growth to 1.5 per cent over the past year.

But behind the headline figures, the national accounts – as compiled by the Australian Bureau of Statistics – give important insights into how the economy is performing, the pressure points on households and the fallout from interest rates and inflation.

Here’s a breakdown of the economy in five charts.

The value of everything produced across the economy through the final three months of last year reached a record $610 billion. It’s a 1.5 per cent improvement over the same quarter in 2023 and 9.1 per cent up on the pre-COVID December quarter.

Growth was driven by government spending and the export sector. Government expenditure added 0.2 percentage points to economic activity, with the Voice referendum part of the story.

While net exports added 0.4 percentage points to growth, this obscured an actual fall in total exports over the quarter. But imports were even weaker.

About 60 per cent of total economic activity comes from the household sector, but this was flat as people struggled under the weight of inflation and interest rates.

There were some positive signs out of the private sector with building construction up 2.7 per cent, with work on data centres and warehouses getting underway.

While overall economic output grew, it continued to fall once the number of people in the country was taken into account.

GDP per capita fell by 0.3 per cent in the quarter, which follows a 0.5 per cent fall in the September quarter and a 0.2 per cent drop in the June quarter.

The last time GDP per person fell three consecutive quarters was during the 1982-83 recession.

As Deloitte Access Economics partner Stephen Smith noted: “Australia is not in recession, but many Australians are.”

One of the most surprising results from the national accounts was the lift in household savings.

It suggests that despite the pressure on households, those with money have found a way to put some cash aside for a rainy day.

It may also be a sign that the lift in wages is also giving some households a bit of protection from cost-of-living pressures.

The increase in the national tax take has been cited by the Reserve Bank as one of the pressures on households, adding to those stemming from inflation and higher interest rates.

Income tax payments had reached a record $91 billion in the September quarter.

But this edged down 3.3 per cent in the December quarter.

This may be a reflection of the drop-off in hours worked by Australians through the quarter. Fewer hours translates into a drop in overall tax.

But at almost $88 billion, Australians are still paying a lot of tax.

Households drive the economy, but they have been feeling the pinch as prices go up on everyday goods and as the Reserve Bank tightens monetary policy.

The ABS noted that through the December quarter, Australian households lifted their spending by 0.7 per cent on essential goods and services – but cut their spending on discretionary products by 0.9 per cent.

One of those discretionary areas to suffer was the hotels, cafes and restaurants sector.

Spending on banana bread, chicken parmigiana or kingfish sashimi dropped by almost 3 per cent in the quarter and is now back to where it was soon after COVID-era restrictions on eating out were lifted.

Spending on tobacco, alcohol, clothing, electricity, gas, furnishings and recreational pursuits have all fallen over the past year.

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