Australia's economy contracted in the third quarter of 2021 due to falling household spending caused by COVID-19 restrictions in the New South Wales and Victoria regions.
On Wednesday (01/December), the Australian Bureau of Statistics released GDP data which decreased by 1.9 percent on a quarterly basis (Quarter-over-Quarter) in the third quarter. Although still better than economists' expectations of a 2.7 percent decline, the GDP figures this time marked the first contraction since the second quarter of last year.
Australia's GDP is still growing on an annual basis (Year-over-Year), but the percentage is only 3.9 percent, a sharp decline when compared to the previous period's growth of 9.6 percent.
Restrictive measures implemented in Victoria and New South Wales were the main cause of the decline in Australia's GDP in the third quarter. As a result, household spending slumped 4.8 percent, the worst since a 12.1 percent decline in the second quarter of 2020. Not only that, service spending also weakened 5.8 percent, hotels and restaurants fell 21.2 percent, recreation and culture fell 11.8 percent, and transportation services slumped to 40.8 percent. percent throughout the third quarter.
COVID-19 restrictions are causing most consumers to refrain from spending their money. This condition was reflected in the increase in the Household Saving Ratio, which increased from 11.8 percent to 19.8 percent. This indicates that consumers tend to want to save money by delaying non-urgent needs such as vacations and using services.
AUD/USD signals recovery
In general, the decline in the third quarter of Australian GDP data this morning is still within the scope of market expectations. Thus, the impact is not too significant on the movement of the Australian Dollar. The AUD/USD pair actually tends to strengthen and is trading at around 0.7157 at the time of writing, up 0.45 percent from the daily open price. Technically, AUD is trying to rebound against the USD after being pressured by the sell-off that had pushed the price below 0.7100.
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