Australia Q1 GDP seen -0.3%q/q but don't rush to declare recession

By Sophia Rodrigues

Based on forecasts from the big four banks, the median for Q1 GDP is -0.3% q/q (ANZ -0.2%, CBA -0.3%, NAB -0.1%, Westpac -0.4%).  While it is certain Q2 GDP will be a big decline, it would  still be too early to call it a technical recession in Australia based on Q1 fall in GDP. Recall the -0.5% q/q fall in GDP in September 2016. The fall was slowly revised up and it was only recently in December 2018 quarter GDP that it was revised to flat growth, and is now at +0.2% q/q.

So even if Q1 GDP matches median with -0.3% q/q, there is a possibility that it would be revised up later and history will not see it as recession. That is probably why the RBA is sticking to the term contraction.