The Australian Bureau of Statistics launched the newest – Australian Nationwide Accounts: Nationwide Earnings, Expenditure and Product, March 2025 – right now (June 4, 2025), which exhibits that the Australian financial system grew by simply 0.2 per cent within the March-quarter 2025 (down from 0.6 per cent) and by simply 1.3 per cent over the 12 months. GDP per capita development was destructive -0.2 per cent as output development was outpaced the underlying inhabitants development. There was a serious slowdown in family consumption expenditure development and the federal government sector total contracted. Whereas the general slowdown led to a decline in import expenditure (which provides to development), the decline in exports was larger, which implies that the exterior sector detracted from development total. The issue is that as the general development charge declines, it’s attending to the stage the place unemployment will begin to rise.
The primary options of the Nationwide Accounts launch for the March-quarter 2025 have been (seasonally adjusted):
- Actual GDP elevated by 0.2 per cent for the quarter (0.6 per cent final quarter). The annual development charge was 1.3 per cent (secure)).
- GDP per capita fell 0.2 per cent for the quarter and 0.4 per cent for the 12 months, signalling declining common revenue.
- Australia’s Phrases of Commerce rose 0.1 per cent for the quarter however have been down by 4.1 per cent over the 12 month interval.
- Actual internet nationwide disposable revenue, which is a broader measure of change in nationwide financial well-being, rose by 0.6 per cent for the quarter and 0.2 per cent over the 12 months.
- The Family saving ratio (from disposable revenue) rose to five.2 per cent (from 3.9).
General development image – development continues at a lot slower charge
The ABS – Media Launch – mentioned that:
Australian gross home product (GDP) rose 0.2 per cent within the March quarter 2025 and 1.3 per cent in comparison with the March quarter 2024 …
Financial development was mushy within the March quarter. Public spending recorded the biggest detraction from development for the reason that September quarter 2017. Excessive climate occasions diminished home remaining demand and exports. Climate impacts have been notably evident in mining, tourism and delivery …
GDP per capita fell 0.2 per cent this quarter, following a 0.1 per cent rise within the December 2024 quarter.
The quick story:
1. The weak spot in personal home demand continued though family consumption expenditure returned modest optimistic contributions to development on this quarter.
2. Authorities consumption expenditure was flat whereas capital spending contracted.
3. The contribution of Internet exports was destructive.
The following graph exhibits the quarterly development during the last 5 years with the intense observations throughout the worst a part of the COVID restrictions and authorities revenue help taken out.
To place this into historic context, the following graph exhibits the last decade common annual actual GDP development charge for the reason that Sixties (the horizontal pink line is the common for the complete interval (3.29 per cent) from the March-quarter 1960 to the March-quarter 2025).
The 2020-to-now common has been dominated by the pandemic.
However because the earlier graph exhibits, the interval after the main well being restrictions have been lifted generated decrease development in comparison with the interval when the restrictions have been in place.
If we take the observations between the December-quarter 2020 and the December-quarter 2022 out, then the common since 2020 has been 1.7 per cent each year.
It’s also apparent how far under historic developments the expansion efficiency of the final 2 a long time have been because the fiscal surplus obsession has intensified on either side of politics.
Even with an enormous family credit score binge and a once-in-a-hundred-years mining growth that was pushed by stratospheric actions in our phrases of commerce, our actual GDP development has declined considerably under the long-term efficiency.
The Sixties was the final decade the place authorities maintained true full employment.
A GDP per capita recession appears set to renew
Within the December-quarter 2024, GDP per capita grew by 0.1 per cent marking the tip of seven consecutive quarters of destructive development.
That destructive streak is again which implies within the March-quarter 2025, whole output averaged out over the complete inhabitants was in contraction.
The which means of the common is questionable, given the extremely skewed revenue distribution in the direction of the highest finish.
Provided that, if the common is declining, then these on the backside are doing it very robust certainly.
The next graph of actual GDP per capita (which omits the pandemic restriction quarters between December-quarter 2020 and December-quarter 2021) tells the story.
Evaluation of Expenditure Elements
The next graph exhibits the quarterly proportion development for the main expenditure parts in actual phrases for the December-quarter 2024 (gray bars) and the March-quarter 2025 (blue bars).
- Important decline in quarterly GDP development – 0.21 per cent in March-quarter 2025 in comparison with 0.57 per cent in December-quarter 2024.
- Whereas import development was destructive (and declining) the contraction in exports was bigger.
- The federal government sector expenditure (recurrent and capital) development contracted.
- Family consumption expenditure development fell.
Contributions to development
What parts of expenditure added to and subtracted from the change in actual GDP development within the December-quarter 2024?
The next bar graph exhibits the contributions to actual GDP development (in proportion factors) for the principle expenditure classes. It compares the March-quarter 2025 contributions (blue bars) with the earlier quarter (grey bars).
- Family consumption expenditure added 0.2 factors (-0.1 level).
- Personal funding expenditure added 0.1 level (secure).
- Internet exports subtracted 0.1 level from development – the 0.2 level export contraction outweighed the 0.1 level import acquire (keep in mind destructive import expenditure development constitutes a lift to development).
- General authorities contribution was destructive.
The following graph was revealed yesterday (June 3, 2025) by the ABS of their – Authorities Finance Statistics, Australia – launch.
It exhibits the evolution of contributions by authorities to GDP development for the reason that March-quarter 2022.
Recurrent spending by authorities has now fallen to a zero contribution to GDP development whereas authorities capital expenditure undermined development within the present quarter.
Materials dwelling requirements rose 0.2 factors within the March-quarter
The ABS inform us that:
A broader measure of change in nationwide financial well-being is Actual internet nationwide disposable revenue. This measure adjusts the quantity measure of GDP for the Phrases of commerce impact, Actual internet incomes from abroad and Consumption of mounted capital.
Whereas actual GDP development (that’s, whole output produced in quantity phrases) rose by 0.2 per cent within the March-quarter, actual internet nationwide disposable revenue development rose by 0.6 per cent.
How will we clarify that?
Reply: The phrases of commerce have been optimistic within the March-quarter and compensation of workers (COE) elevated 1.5 per cent.
In per capita phrases, actual internet nationwide disposable revenue improved by a small margin (0.1 per cent) for the quarter however over the 12 months there was a 1.4 per cent decline and since mid-2022, the decline has been 4.7 per cent.
So, on common, Australians are worse off now in materials phrases that they have been 12 months in the past.
Family saving ratio rose 1.3 factors to five.2 per cent
The RBA tried to wipe out the family saving buffers because it hiked rates of interest hoping that this would scale back the chance of recession.
In fact, that course of attacked the lower-end of the wealth and revenue distribution, given the rising rates of interest have poured tens of millions into these with interest-rate delicate monetary belongings.
It’s now clear that households have gotten cautious – lowering total expenditure development and rising their saving out of their disposable revenue.
The next graph exhibits the family saving ratio (% of disposable revenue) from the December-quarter 2000 to the present interval.
It exhibits the interval main as much as the GFC, the place the credit score binge was in full swing and the saving ratio was destructive to the rise throughout the GFC after which the latest rise.
An rising saving ratio gives the family sector total with an elevated capability to danger handle within the face of uncertainty.
The following graph exhibits the saving ratio since 1960, which illustrates the way in which wherein the neoliberal interval has squeezed family saving.
Going again to the pre-GFC interval, the family saving ratio was destructive and consumption development was maintained by rising debt – which is an unsustainable technique provided that family debt is so excessive.
Though the ratio has been rising barely in current quarters, it’s nonetheless effectively under previous ranges.
The next desk exhibits the affect of the neoliberal period on family saving. These patterns are replicated around the globe and expose our economies to the specter of monetary crises rather more than in pre-neoliberal a long time.
The outcome for the present decade (2020-) is the common from June 2020.
| Decade | Common Family Saving Ratio (% of disposable revenue) |
| Sixties | 14.4 |
| Nineteen Seventies | 16.2 |
| Eighties | 11.9 |
| Nineteen Nineties | 5.0 |
| 2000s | 1.4 |
| 2010s | 6.6 |
| 2020s on | 8.8 |
| Since RBA hikes | 3.4 |
Actual GDP development rose however hours labored rose extra and productiveness development declined
Actual GDP rose 0.2 factors within the quarter, whereas working hours rose by 0.1 per cent.
Which implies that GDP per hour was basically unchanged (after rounding).
Nonetheless, the information exhibits that GDP per hour labored fell by 0.9 level for the quarter – that’s, a lower in labour productiveness.
That’s the third consecutive quarter of declining productiveness development.
The ABS goes to launch extra detailed productiveness development information subsequent quarter, which can permit us to be extra exact by way of understanding which sectors are contributing to the malaise.
However the proof up to now is that the ‘market-sector’ is offering modest productiveness development whereas the ‘non-market sector’ (training and many others) is bringing the general determine down.
There are huge measurement points encountered in assessing non-market sector productiveness development and so the combination outcome won’t be as poor as is usually recommended.
The next graph presents quarterly development charges in actual GDP and hours labored utilizing the Nationwide Accounts information for the final 5 years to the March-quarter 2025.
To see the above graph from a special perspective, the following graph exhibits the annual development in GDP per hour labored (labour productiveness) from the start of 2008 to the March-quarter 2025.
The horizontal pink line is the common annual development for the reason that March-quarter 2008 (0.84 per cent), which itself is an understated measure of the long-term pattern development of round 1.5 per cent each year.
The comparatively sturdy development in labour productiveness in 2012 and the largely above common development in 2013 and 2014 helps clarify why employment development was lagging given the true GDP development.
Development in labour productiveness implies that for every output degree much less labour is required.
The distribution of nationwide revenue – wage share regular
The wage share in nationwide revenue was regular at 53.7 per cent within the March-quarter 2025.
The revenue share fell to 27.5 per cent (down 0.1 level).
The residual is essentially the federal government share.
The primary graph exhibits the wage share in nationwide revenue whereas the second exhibits the revenue share.
The declining share of wages traditionally is a product of neoliberalism and can in the end need to be reversed if Australia is to get pleasure from sustainable rises in requirements of dwelling with out file ranges of family debt being relied on for consumption development.
Conclusion
Do not forget that the Nationwide Accounts information is three months outdated – a rear-vision view – of what has handed and to make use of it to foretell future developments just isn’t simple.
The Australian financial system grew by simply 0.2 per cent within the March-quarter 2025 (down from 0.6 per cent) and by simply 1.3 per cent over the 12 months.
GDP per capita development was destructive -0.2 per cent as output development was outpaced the underlying inhabitants development.
There was a serious slowdown in family consumption expenditure development and the federal government sector total contracted.
Whereas the general slowdown led to a decline in import expenditure (which provides to development), the decline in exports was larger, which implies that the exterior sector detracted from development total.
The issue is that as the general development charge declines, it’s attending to the stage the place unemployment will begin to rise.
Clarification on terminology
I advocated a degrowth technique for the worldwide financial system total provided that our footprint is 1.7 occasions the capability of the biosphere to regenerate.
To realize that technique, provided that many poorer nations should proceed to develop, would require somewhat substantial lower backs in spending and consumption within the richer nations.
After I analyse the Nationwide Accounts information or any expenditure/output information, I write as if development is ‘good’.
However that terminology is used within the context that with out financial development and with none substantial shifts in revenue distribution and authorities transition insurance policies, making an attempt to pursue a recessionary technique would harm the weakest members of our society disproportionately.
In some respects, I’m abstracting from the damaging actuality of our ecological footprint.
That’s sufficient for right now!
(c) Copyright 2025 William Mitchell. All Rights Reserved.