"Today's national accounts for the March quarter show that the Australian economy is slowing by more than both the Government and the Reserve Bank expected while inflationary pressures remained sticky and strong," Innes Willox, Chief Executive of the national employer association Ai Group said today.
"Despite an economy that continues to slow, inflation remains worryingly persistent. With the Reserve Bank Governor reinforcing that it will do what it takes to reduce inflation, we face the worrying prospect of further interest rate rises while we are very close to having a shrinking economy.
"Real GDP grew by only 0.1% in the March quarter and 1.1% annually. Aside from the COVID pandemic, this is the lowest rate of annual growth since the 1990s recession.
"While household and government consumption spending were somewhat higher, business and public sector investment were both lower in March.
"Conditions are especially challenging for many branches of industry. The construction industry contracted by a significant 2.6% in the quarter, while the retail, wholesale, accommodation and food and information and telecommunications industries all shrank in real terms.
"Ai Group's more contemporaneous industry data also suggests conditions for many businesses are unlikely to have improved since the March quarter. Our Australian Industry Index, also released today, points to sharp falls in manufacturing and construction activity during May. Construction is facing particularly difficult circumstances with a raft of insolvencies presently afflicting the industry," Mr Willox said.
