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June quarter national accounts

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The June Quarter National Accounts released today indicate that GDP fell by one per cent in the June Quarter, after rising by 0.4 per cent in the March Quarter.

Taking the two quarters together abstracts from the volatility often apparent in quarterly numbers, and provides a better indication of underlying trends in the economy.

On this basis, GDP fell by 0.7 per cent (on an annualised basis) over the past six months,.a smaller decline than the 3.2 per cent on the same basis in the first six months of 1990-91.

This broad picture is evident in the ABS measure of trend GDP which fell by 0.3 per cent in each of the March and June Quarters.

Net exports again contributed positively to activity in the June Quarter bringing the total contribution for the financial year as a whole to 3.1 percentage points - the highest contribution from the external sector in a financial year for nearly three decades.

The positive contribution in the June Quarter means that, in all but one of the past eight quarters, net exports have boosted activity.

It is this contribution - from expanded exports and reduced import growth - that has underpinned the dramatic improvement in our current account deficit in 1990-91, despite the continued fall in our terms of trade.

The implicit price deflator for non-farm GDP - which is a broad measure of price changes in the domestic economy - rose by only 0.1 per cent in the June Quarter, bringing the total increase for the year to the June Quarter to only 2.8 per cent.

This is the smallest increase since the year to the March Quarter 1964, and is further evidence that inflation is on the way down in Australia.

While private investment, including non-residential construction, fell in the June Quarter, dwelling investment grew slightly. This is consistent with evidence given by leading indicators (finance and building approvals) that the important housing sector is approaching

a turning point.

CANBERRA ACT 15 August 1991