Overview

Q1 GDP rose by 1.8% (1.1% y/y) and is now 0.8% above pre-COVID levels. Overall, these data show that the rebound was uninterrupted by the tapering in some fiscal support in Q1 and that brief periods of virus-related shutdowns have not stalled the recovery. Services consumption continued to recover in the quarter and the household savings rate saw further normalisation, but some pandemic impacts continue to linger. Services consumption and exports are still softer than pre-pandemic levels, while the household savings rate remains elevated, as does goods consumption. Today’s outcome also reflects the ongoing support of policy makers with both housing and business investment key supports to growth in the quarter. This release will have few implications for policy as it confirms that, in aggregate, activity has recovered its pre-COVID level. Combined with an outlook for continued healthy growth over the next two years, that leads us to continue to expect the RBA to taper QE and hold back on rolling the YCC target forward at the July meeting – taking the foot slightly off the accelerator but maintaining an exceptionally easy stance.

Find out more in the NAB Australian GDP Q1 2021 Report