New figures from the Department of Finance show that strong consumer spending prior to Christmas underwrote economic expansion of roughly 3 per cent, with the federal government’s budget deficit $13.2 billion better off by the end of January than government estimates suggested.
At the end of January, Australia had a $52.2 billion deficit. Tax revenue was also $7 billion higher than forecast, with government expenses $5.9 billion lower than expected, due to the historically low unemployment rate of 4.2 per cent.
“These latest budget figures demonstrate Australia’s continued economic resilience, even with the various curveballs COVID-19 continues to throw at Australia,” Finance Minister Simon Birmingham said.
Ongoing supply chain issues hampered businesses from operating at full potential, while Omicron interruptions also stifled possible growth.
“The main driver of growth is surging household consumption,” ANZ economist David Plank said
“Government spending is the other area of strength, while housing construction, business investment and net exports all look set to subtract from growth.”
“A massive bounce in household consumption due to the easing of restrictions in NSW and Victoria will be responsible for the large expansion in output,” CBA economist Gareth Aird added.
“The data will indicate that the Australian economy closed out 2021 with considerable momentum despite the significant setback in the third quarter of 2021 due to the delta outbreak.”
ABS will release the gross domestic product report on Wednesday.
