Australia Economy News, Inflation, GDP, ASX and More – December 2024

According to the latest Australia Economy news reports, Australia’s economy grew by 0.3% in the September quarter and 0.8% over the year, according to the Australian Bureau of Statistics.

Australia’s annual inflation rate has surged to its highest level in 32 years driven by rising housing and gas prices. The inflation is projected to peak at 7.75% by December.

South Australia has reported a 0.8% growth in economic activity for the September quarter of 2024. The Business Council of Australia’s report also ranked South Australia as the best place to do business in the country for the second consecutive year.

Australian universities have expressed concerns over the government’s proposed cap on international student admissions, warning it could lead to job losses up to 14,000 jobs across the sector.

Australia boasts a highly developed mixed economy and ranks as the 14th largest in terms of nominal GDP and 19th when measured by purchasing power parity (PPP).

Household saving-to-income ratio increased to 3.2%, from 2.4%. Discretionary household consumption declined by 1.1%.

The Reserve Bank of Australia has said that in the near term, growth will be subdued due to high inflation and interest rates that are affecting demand.

The cash rate target is currently pegged at 4.35% with a view that inflation will revert back to the target range of 2-3% in 2025.

According to projections, the growth rate of GDP will stand at 0.4% by the end of 2024. Going forward, the rates will drop slightly with the rates estimated to be about 0.6% in 2025 and 0.5% in 2026.

Economic Indicators

• Current GDP Growth Rate (Q3 2024): 0.3%
• Annual GDP Growth Rate: 0.8%
• Projected GDP Growth Rate (End of 2024): 0.4%
• Projected GDP Growth Rate (2025): 0.6%
• Projected GDP Growth Rate (2026): 0.5%

Reports show that one in three Australian jobs is at serious risk due to AI advancements, with projections suggesting that 1.3 million full-time roles (approximately 9.9% of the workforce) could be automated within the next four years.

Studies indicate that tasks with repetitive tasks are at risk. Bank workers, bookkeepers, and finance brokers are among the jobs most susceptible to automation. The rates of automation for banking jobs are expected to reach up to 45.8% by 2027.

Almost 21% of the job postings in Australia show a high exposure to generative AI technologies like ChatGPT.

The manufacturing sector is already being affected by AI, with automation technologies able to carry out up to 30% of tasks in a manufacturing environment.

AI integration can add about AUD 115 billion to the Australian economy by 2030 due to productivity. The Technology Council of Australia forecasts the generation of 200,000 jobs related to AI by 2030.

Australia has recorded 12 consecutive quarters of GDP growth up to late 2024, though the pace of growth has been slow with an average of about 0.3% to 0.4% quarterly.

The unemployment rate has been low and stable, now at around 4.1% as of mid-2024.

There has been a steady drift in wages with the wage price index increasing by some 4.1% year-on-year as of mid-2024.

While household spending has declined in some discretionary areas, it is still a part of the GDP. The savings ratio also improved slightly to about 3.2%.

India And Australia Review Progress On Proposed Free Trade Agreement

Recent discussions between India and Australia have been concerning the progress of their proposed Comprehensive Economic Cooperation Agreement that would build upon the interim Australia-India Economic Cooperation and Trade Agreement (AI-ECTA), which recently came into effect in December 2022.

Senior officials have reviewed the negotiations of their proposed CECA, ranging from trade in goods to services, mobility, as well as cooperation in areas such as agricultural technology.

Merchandise trade between India and Australia reached about $24 billion for the fiscal year 2023-24, while India exported $7.94 billion and imported $16.15 billion worth of goods.

India is nudging to hasten the negotiations to conclude the CECA before the elections that are scheduled to take place in Australia in 2024, fearing that further delay would only be an obstacle to the progress.

The eleventh round of negotiations is set to take place next month, which is expected to conclude within two months.

Australia’s Q3 GDP Growth Disappoints

Australia’s GDP growth for the third quarter of 2024 disappointed markets, increasing by only 0.3% compared to expectations of 0.4%. This is the twelfth consecutive quarter of growth but the pace is slowing as year-over-year growth stood at 0.8%, the lowest since late 2020.

The growth driver was a 6.3% increase in public investment, which added positively to GDP. This is the strongest growth in five quarters.

Household consumption was flat after a 0.3% decline in the previous quarter. The household savings ratio increased to 3.2%.

Total export volume of goods and services climbed minutely at 0.2 per cent, though the imports slumped by 0.3 per cent contributing marginally toward GDP. Meanwhile, variation in inventories negatively had an effect on growth thereby subtracting 0.4 percentage points from the GDP.

The market strategists now feel that Australia’s Reserve Bank may kick-start its cutting interest rate as early as April of 2025. For now, the official cash rate stands at 4.35 percent.

What is Australia’s GDP in 2024?

Australia’s GDP is expected to be around $1,745 billion USD by the end of 2024. This figure is according to macroeconomic models and analysts’ forecasts from Trading Economics. The GDP for 2023 was reported at $1,723.83 billion USD.

Is Australia Richer than the USA?

Australia is not richer than the USA if their GDP figures are compared.

As of 2023, the nominal GDP of Australia is approximately $1.723 trillion. In 2023, the USA possesses a much larger economy in terms of nominal GDP-about $26.9 trillion. Australia stands as the 14th largest economy, whereas the USA occupies the highest position.

When taking into account the GDP per capita, Australia would have a higher figure estimated to be around $61,340 in 2023. The GDP per capita of the USA is approximately $82,000.

Is Australia’s Economy Better than India?

As of 2024, Australia has a nominal GDP of about $1.7 trillion. The economy is described as a mature, advanced economy with a high standard of living. India’s nominal GDP is around $3.73 trillion, the fifth-largest economy in the world.

The GDP growth rate in Australia is expected to be around 1.8% for fiscal year 2023-24. India has witnessed considerably higher growth rates, around 6-7%, per annum over the past decade.

The GDP per capita for Australia is about $66,000. The corresponding figure for India is roughly $2,600.

In 2022, Australia exported goods valued at about $31.5 billion to India while importing about $7.66 billion from India. The Economic Cooperation and Trade Agreement between the two countries has eased trade between them since over 85% of goods exported from Australia to India attract less than 5% tariffs.

Australia has invested around $15 billion in India while India has invested around $12 billion in Australia.

What is the Richest State in Australia?

The richest state in Australia is Western Australia, which leads in both income and wealth metrics. Western Australia has an average household income of $133,224, higher than the national average of $107,276.

The average household net worth in Western Australia is approximately $952,500, well above the national average of $809,900.

In terms of GDP per capita, Western Australia is exceptionally high reported around $289,500, boosted mainly by the mining sector as well as iron ore productions. Major capital cities, with Sydney second at a point of $86,500, while Perth is relatively at about $70,300.

New South Wales is a close competitor but does not surpass Western Australia in terms of wealth metrics. Its GDP per capita is about $97,310 as of 2024.

Other states such as Victoria and Queensland have lower income and wealth levels than Western Australia. Victoria’s GDP per capita is about $87,764, and Queensland’s is about $70,300.

Drivers of Economic Growth in Australia

1. Domestic Demand

Domestic demand has been a significant contributor to Australia’s economic performance. In early 2024, household consumption and public consumption were above expectations.

Household Consumption rose 0.4% in Q1 2024; growth in essential services, utilities, and transport remained very strong.

2. Government Spending

Public demand is expected to rise at 4.0% in December 2023 and 2.2% by June 2024. Commonwealth government spending boosted economic growth by 0.2 percentage points in the June quarter of 2024, mainly due to increased funding for health services.

3. Business Investment

Business investment growth was at 7.6% in December 2023 but is expected to ease to around 1.2% by mid-2024 as firms adjust to changing economic conditions.

A pipeline of construction work suggests that continued investment activity, especially in industries such as mining and infrastructure, exists.

4. External Trade

Exports grew by 0.5% in the June quarter of 2024 as service exports rebounded considerably. However, imports had also increased which led to a current account deficit arising from increased payments made to non-residents.

5. Labor Market Conditions

The unemployment rate stood at 4.1% in June 2024. Wages are also on the high side, with the wage price index increasing by 4.1% over the year.

Economic Indicators

Current Inflation Rates in Australia

The annual rate of inflation in Australia stands at 2.8%, the lowest rate since 14 quarters. The Consumer Price Index rose by 0.2% in the September quarter of 2024.

• Food and Non-Alcoholic Beverages: Increased by 0.6% in the September quarter.
• Alcohol and Tobacco: Rose by 1.3%.
• Recreation and Culture: Also saw a rise of 1.3%.

Consumer price expectations have tumbled to 3.8% in November 2024, down from 4.0% in October, the lowest level since October 2021.

Current Unemployment Rate in Australia

The seasonally adjusted unemployment rate in Australia as of October 2024 is at 4.1%, remaining steady for the third month consecutively. This rate is up a bit compared to last year, which was around 3.6%.

The number of unemployed people has increased to 625,800, growing by 8,300 people compared to the previous month. The participation rate was recorded at 67.1%.

Total employment expanded by 15,900 during October 2024 and attained a record high at 14.54 million. The full-time employment increased by 9,700 to 10.04 million, whereas the part-time employment increased by 6,200 to 4.50 million.

Employment Data

Major Export Sectors in Australia

1. Mining Sector

In FY 2024, the export value for iron ore was estimated to stand at AUD 138 billion. In 2022, it was the world’s biggest export of coal briquettes that amounts to AUD 109 billion.

Coal exports vary however remain an essential portion in the economy. A minor fluctuation has seen an export value of AUD 67.3 billion for petroleum gas exports.

Australia benefits from rich mineral deposits and advanced mining technologies. The country primarily exports to markets like China (32% of total exports), Japan (16%) and South Korea (7%).

2. Agriculture Sector

Beef and Veal leading agricultural exports valued at AUD 12.4 billion in FY 2024. Wheat exports reached approximately AUD 9.87 billion. Australia also exports huge quantities of wine, dairy and horticultural products.

Australian agriculture is noted for its premium quality output and rigorous application of biosecurity standards, making it better known in global markets. The sector has been pretty resilient with agricultural exports registering a record of AUD 80 billion in 2022-23.

3. Services Sector

• Education Services: Australia is one of the top destinations for international students, earning massive dollars for export.
• Tourism: Despite the impacts of COVID-19, tourism remains on the rebound path and will be an important service export.

Trade Volume Changes and Balance of Trade Data

In September 2024, Australia’s exports decreased by 4.3% to AUD 40.83 billion, the lowest in 33 months. The decrease was mainly due to falls in coal, metal ores and other mineral fuels.

Non-rural goods sales decreased by 4.2%, while rural goods increased by 5.4% due to meat exports.

Australia has had a trade surplus in recent years with the mining resources being in high demand.

Metaliferous ores constituted close to 29% of exports in July 2024, whereas coal was at about 15%.

Updates on Existing Trade Agreements

Australia-China Trade Relations

It is on record that Australia’s trade relationship with China has been strengthened with the implementation of the China-Australia Free Trade Agreement since December 2015.

At the Annual Leaders’ Meeting in November 2024, Australian Prime Minister Anthony Albanese and Chinese Premier Li Qiang signed a series of agreements to renew dialogue and deepen cooperation in various sectors, such as education and climate change.

A new Memorandum of Understanding on Strategic Economic Dialogue was agreed to facilitate discussion on economic policy and cooperation. The leaders also signed an MoU to promote collaboration in education and research.

The ChAFTA has seen a boom in Australia’s exports to China, more than doubling since its implementation.

Australia-United States Trade Relations

In 2023, trade between Australia and the US was around AUD 88 billion with exports from Australia at around AUD 36 billion.

The AUSFTA promotes trade in goods, services, and investment while promoting cooperation in areas such as intellectual property and e-commerce.

Australia-European Union Trade Relations

As of 2024, negotiations for the Australia-EU Free Trade Agreement are underway, which aims to reduce tariffs and increase market access for Australian agricultural products and services.

The deal aims at bolstering economic relations with an annual gain of about AUD 15 billion, when signed.

Analysis of Consumer Confidence

Consumer confidence in Australia increased up to November 2024, reaching a 94.6 points high, from 89.8 points in October, which was the highest in two and a half years.

This increase is a 5.3% month-to-month boost that is attributed to diminished worries on interest rate increase and positive economic expectations. Key components contributing to this rise include:

• Family Finances: It has improved by 6.8% compared to the previous year.
• Economic Outlook: The expectations for the next year jumped by 8.7%.

The index is still at a level below the neutral point of 100. About 35% of consumers report that they will spend less money on gifts this Christmas compared to last year, though this is better than previous years when 40% said the same.

Consumer Confidence Indicators

Role of Small and Medium Enterprises (SMEs) in Economic Recovery

As of 2023, SMEs account for more than 98% of all businesses in Australia, employing around 70% of the workforce and generating around $500 billion in economic activity, which amounts to about one-third of the nation’s GDP.

SMEs employ around 5.1 million people and account for 42% of all apprentices and trainees in training.

Performance of the Australian Securities Exchange (ASX)

As of late 2024, the ASX All Ordinaries Index had bounced back from a low point reached at the end of October 2023, marking a 5.96% fall from June 2023. At the reporting period close, the index had increased by 8.27% over the year.

Financial Performance

Market Capitalization: The total domestic equity market capitalisation stood at around $2.6 trillion.

Operating Revenue: $1.03 billion, up by 2.4% from FY23, a record performance under challenging market conditions.

Net Profit After Tax (NPAT): Statutory NPAT rose to $474.2 million, an increase of 49.4% compared to the previous year.

Investment Data

Current Trends in the Housing Market

Average annual price growth across major capital cities has slowed to just under 6%, from higher rates earlier in the year.

Specific regions, including Perth, Brisbane and Adelaide, are still experiencing double-digit growth, while Sydney’s growth has stalled and Melbourne is experiencing modest declines.

Home sales have increased nationally by 10.4% compared to the same period in 2023, with approximately 394,000 sales recorded. This growth is strong in Western Australia, where sales surged by 26.8%.

The market is witnessing an increase in advertised housing supply with around 138,000 new listings recorded nationally during the spring selling season, the highest level since 2018. It is happening at a time when buyer demand is slightly going down due to economic pressure.

The median dwelling value has risen to 8 times the median household income, which is up from 7.6 times a year ago.

Different predictions indicate that house prices will jump by 4% to 7% in combined capitals in 2025 and unit prices by 3% to 5%.

Australian Dollar (AUD) Performance

As of December 2024, the Australian dollar traded at about 0.6482 USD. It was somewhat higher than its previous session but had declined by around 2.07% over the year.

The AUD has remained quite volatile in 2024, trading in the range of 0.63 and 0.69 USD.

The Reserve Bank of Australia has kept its cash rate at 4.35%, while the US Federal Reserve has indicated that it is ready to cut rates if required, which creates a yield differential that may influence capital flows. A narrowing of this differential may support the AUD against the USD in 2024.

The economy of Australia is heavily dependent on exports to China, especially in commodities like iron ore and coal.

There are fears of a recession in the US and the uncertainty of the global economy, which has led to changing investor sentiment and thus, demand for riskier assets like the AUD. A weak US economy could mean a weaker USD.

Major banks remain guardedly bullish about the prospects for AUD into 2025, which might go as high as 0.70 USD due to mounting inflation pressures and RBA hawkishness.

Performance of New South Wales, Victoria, and Queensland

Projections for GDP, Inflation, and Employment in Australia

Economic Growth (GDP)

• 2024: GDP growth is projected at 1.5% influenced by high interest rates and subdued consumer spending.
• 2025: A recovery is anticipated with GDP growth increasing to 2.2% as inflation moderates and household incomes improve due to tax cuts and declining inflation.
• 2026: Growth is expected to strengthen to 2.4%.

Inflation Rates

• 2024: Headline inflation is expected to average around 4.1%, with trimmed mean inflation at approximately 3.6%.
• 2025: Inflation rates are expected to continue declining, with headline inflation easing to about 3.1% and reaching the RBA’s target range of 2-3% by 2026.
• By the end of 2026, inflation is expected to settle at about 2.6%, with supply chain issues resolving and demand closely aligning with supply.

Employment Projections

• 2024: The unemployment rate is projected to rise slightly to 4.2% as economic conditions remain tight.
• 2025: An increase to 4.3% is expected as the economy adjusts to higher interest rates and subdued demand.
• By 2026, the unemployment rate is expected to stabilize at 4.4%.

Latest Australia Economy News in 2024

The Australian economy expanded by 0.3% in the September quarter of 2024, marking the twelfth successive quarter of growth but below market consensus.

Inflation in Australia is projected to peak at 7.75% by December 2024 influenced primarily by rising living costs. The household savings ratio rose to 3.2% from 2.4%.

KPMG forecasts a weaker economic outlook for Australia, predicting GDP growth of 1.4% for 2024, down from previous estimates.

Australia’s current account remains in deficit for the sixth consecutive quarter.

The Australian government has started a parliamentary inquiry into long Covid to understand better how the illness affects the population and how to define it more clearly.

The Reserve Bank of Australia is likely to hold the line on interest rates when it meets for the last time in 2024 on December 10.

Australia’s inflation data show mixed signals, with the headline Consumer Price Index steady at 2.1%, while underlying inflation measures indicate pressures-the trimmed mean CPI rose to 3.5%.

Per capita GDP fell by 0.3% in the September quarter, the seventh consecutive quarter of decline in per capita GDP.

Also Read: Nigerian Exchange Group News, Companies, IPO, Trading and More – 2024