The nation’s leading economists are forecasting growth of 0.35% in the September Quarter followed by a 1.4% increase in the December Quarter, heralding the return of a stronger economy.
The forecasts depend on a resurgence in consumer confidence and consumer spending.
Consumer spending fell by 12% in the June Quarter, leading to a 7% contraction of GDP, according to Westpac chief economist Bill Evans.
“It really is explained by consumer spending and the government policies around lockdown,” Evans says.
Unable to go out and spend during this time, consumers put the country into a “different kind of recession” – but increased their savings to 20%, he says.
Broadly, the country’s economic fundamentals are sound, says Matthew Peter, chief economist at QIC.
“We need to remember that the fall in economic activity was due to a lockdown of consumers and businesses,” says Peter.
With a higher level of savings now in place, households have plenty of spending power as the economy reopens.