Last week’s news was dominated by the RBA’s decision to lift interest rates by a further 0.25 percentage points, taking the cash rate to 4.1%. This was largely unexpected, with most economists predicting a hold at this meeting on the back of some weaker–than–expected economic data. However, the RBA attributed its decision to what it sees as ‘upside risks to inflation’. This includes sticky services inflation both globally and in Australia, higher risk of a wages breakout following the Fair Work Commission’s decision around minimum and award rates of pay, low productivity growth and increasing house prices. The RBA’s hawkish tone is causing the financial market and commentators to prepare for upcoming cash rate hikes.
Economic growth data was also released last week, with the Australian economy growing 0.2% in the March quarter as measured by GDP. This is the lowest quarterly reading since the Covid-19 lockdown in the September 2021 quarter. WA performed comparatively well, with a growth rate of 0.8% over the quarter, surpassing all other states. However, much of this was driven by the Government’s response to the floods in the Kimberley region earlier in the year, with Government consumption rising 1.6% for the quarter. Household consumption grew just 0.2% for the quarter, while business investment rose 0.9%.
Population data released this week confirmed that Australia’s population continues to grow at a rapid pace, increasing by 1.9% over 2022 – the highest rate of growth since 2008. This was even greater in WA, with the State’s population expanding 2.3% over the year. Since the reopening of international borders in early 2022, net overseas migration into WA has exploded, with just under 38,000 people moving from overseas in 2022, including 11,700 in the December 2022 quarter. Net interstate migration also remains strong, with a further 3,100 people migrating from the eastern states in the December 2022 quarter, taking net interstate migration to 10,600 for the year. Natural population growth has decreased due to lower birth rates and higher mortality rates caused by Covid-19.
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