Australian Q1 GDP largely reliant on domestic demand

The net export contribution, which was the major driver of Australia's GDP growth in 2013 and 2014 when it accounted for well more than half of overall growth, turned out to be down less than expected at 0.5pp qoq (median 0.0%, SG 0.1%). Even given weak public spending, Societe Generale revised the Q1 GDP growth forecast to 0.7^ from 0.6%. From what the retail sales and new car registrations, private consumption should have expanded briskly again, albeit perhaps not quite at the 3.7% quarterly annualised pace of Q4, argues Societe Genrale. But gross fixed capital formation (GFCF) was weak. 

From partial data analysts learn that inventories added to growth (expected at 0.4pp) reversing the fairly substantial contraction that occurred in Q4 (and which subtracted 0.6pp from quarterly GDP growth). 

"The GDP growth is expected to have remained below trend, but only fractionally, and to be stronger than in Q4. The annual rate of growth at 2.1% is likely to mark the low point in this cycle", said Societe Generale in a report on Tuesday.