ECONOMY BACK ON TRACK; FARM RECORD

Economic growth on the post-Delta rebound

Australia’s economy grew 3.4 per cent, seasonally-adjusted, in the December 2021 quarter, as household spending surged after the Covid-19 Delta wave abated. Quarterly gross domestic product figures from the Australian Bureau of Statistics showed that household spending jumped 6.3 per cent, while government expenditure remained flat. New South Wales (6.7 per cent), Victoria (3.7 per cent) and the Australian Capital Territory (1.9 per cent) led the rebound in economic growth. Australia’s economy contracted 1.9 per cent in the previous September quarter, as lockdowns were re-imposed in the two largest states and in the national capital.

Farm production tipped to hit record $81 billion

Agricultural production by gross value in Australia is poised to reach a record $81 billion in 2021-22, according to official government figures. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said the forecast represented a $12 billion increase on the previous year, attributable to a combination of record crop production and the highest prices (in real terms) for Australian agricultural produce in 32 years. The value of farm exports was tipped to reach a record $64 billion. ABARES anticipates, however, that the 2022-23 production value was likely to ease to $76 billion in an expected return to more average seasonal conditions. International prices were expected to retreat from high levels as overseas production increased, but prices could remain higher for longer in the event of continued disruptions and a slower global recovery.

Current account surplus shrinking as imports bounce back

Australia’s current account surplus is falling as imports start to rise in a post-Covid economy, according to ABS figures. The ABS reported that exports of goods and services fell $1.5 billion in the December quarter, while imports rose $4.9 billion, as the current account surplus narrowed from $22 billion to $12.7 billion. Exports of iron and minerals fell 28 per cent, but coal exports jumped 39 per cent and cereals by 30 per cent. Imports of fuels and lubricants rose 16 per cent as travel restrictions were eased. Australia has recorded current account surpluses every quarter since June 2019.

Emissions falling in growing economy

Emissions in Australia fell by 0.8 per cent over 12 months as the national economy grew by 3.9 per cent, according to figures released by the Federal Government. Industry, Energy and Emissions Reduction Minister Angus Taylor said the quarterly update of the National Greenhouse Gas Inventory revealed that in the year to the end of September 2021, emissions were four million tonnes lower than for the same period in 2020. Mr Taylor said that in the National Electricity Market, emissions had fallen on average more than four per cent a year for each of the last five years. He said latest projections showed that Australia would meet and beat the original 2030 Paris target by up to nine percentage points.

RBA chief holds firm on interest rates

Reserve Bank of Australia Governor Dr Philip Lowe has maintained his stance on monetary policy, maintaining that the bank would not lift the cash rate until actual inflation was sustainably within the range of 2-3 per cent. Dr Lowe said inflation had increased sharply, resulting from higher global energy prices and supply chain disruptions. Underlying inflation was forecast to increase further to around 3.25 per cent, but wages growth remained modest and the long-term inflation outlook was uncertain. The present cash rate is 0.1 per cent.

Visa conditions relaxed for workers in critical sectors

In a move to target skills shortages, Immigration Minister Alex Hawke has announced a relaxation and extension of temporary visa settings for international workers. The Minister has relaxed visa conditions for recent engineering graduates and for student visa holders working in critical areas. Additional concessions would be provided to temporary visa holders working in, or with an offer to work in, agriculture, food processing, health care, aged care, disability care and tourism and hospitality.