Adding to this is the chatter around our central bank, which has been under pressure to cut rates, but has largely resisted this, choosing instead to keep the cash rate steady at 4.35% – a position it’s held since November 2023.

Reflecting on how the Aussie economy has performed in 2024 – and how it might fare in the following year, given various headwinds including a second Trump administration in the U.S. and a continuing slowdown in China – ANZ senior economist Catherine Birch contributed several thoughts on the outlook.

Starting with the recent GDP numbers, Ms Birch said it showed the impact high inflation has been having on Australia.

“We did see the slowest annual GDP growth in Australia outside of the pandemic, since the 1990s recession, and that does show the economy is really feeling it at the moment,” Ms Birch explained.

“We have seen inflation really be a challenge for the economy. That has certainly caused some challenges for many industries and parts of the economy: construction is a big one in particular.

“We know a lot of construction firms have really struggled with the sharp rise we’ve seen in input costs. And some of the supply disruptions have really constrained how much can really be done, and therefore limiting growth as well.”

In response to high inflation, the RBA had taken a tough line on rate cuts – and had received pushback for this. But Ms Birch said it’s important to remember Australia had differed from other countries in terms of its initial experience with inflation, and how the RBA had chosen to respond to this.

“We saw inflation pick up later, we saw it peak later, but it’s also been slower to come down as well,” she said.

“And one of the differences, not only in the timing of rate changes versus other central banks, is that the RBA took our cash rate to 4.35% – well below a lot of comparable economies.

“For example, over in New Zealand, their OCR peaked at 5.5%, we saw over in the US, the rates peaked at 5.25-5.5% as well.

“So one of the reasons the RBA did that was that they were willing to tolerate a slower return of inflation back to target with the benefit being that unemployment wouldn’t rise as much if they took rates even higher to try and get inflation back to target sooner.”

Indeed, evidence of a consistently resilient labour market in Australia seems to have justified the Reserve Bank’s actions.

Looking into the new year, it was likely that – unexpected data notwithstanding – the RBA’s cautious policy would be likely to continue.

“We’re expecting that the RBA will start to cut rates in May and that there will be only two 25 basis point rate cuts in this cycle – so getting down to 3.85% by August next year, and then staying there,” Ms Birch said.

“A lot of people might not want to hear that sort of forecast. It will depend quite a bit on the data as to when the cuts start.

“If we see inflation and labour market data and household spending becoming weaker than expected over the next couple of months, it’s possible that they may start to cut rates in February.”

Turning to global headwinds in 2025, Ms Birch said the key word guiding predictions for both the Australian dollar and commodity prices was ‘volatility.’

The former would be likely to drop in the first half of the year, influenced by the anticipated impacts of Donald Trump’s promised tariff policy.

“We think that we’ll be seeing, by the middle of 2025, the Aussie dollar at around 63 US cents, but potentially there are periods where it gets lower, closer towards the 60 cents mark,” she said.

However, Ms Birch added several variables would enable Australia’s economy to survive these headwinds, with the dollar moving back towards 67 cents in the second half of 2025.

“We think Australia is still relatively well placed compared to a lot of other economies in terms of our growth outlook, and also our ability to deal with any shocks coming up as well, so that room we have on the fiscal policy side and monetary policy side,” she said.

Geopolitical and global economic volatility would likely also retain the strength of gold as a safe haven, she added, while other commodities would be shaped by trends coming out of Beijing.

“We think about something like lithium – the oversupply in batteries that we’re seeing in China will likely limit the near-term outlook at least, but the longer-term outlook still looks really positive,” Ms Birch said.

“And then of course there’s the China story as well: With that slowdown, that structural weakness that we’re seeing in the property sector only being partly offset by some of the stimulus measures and the move towards those new productive forces.

“So more investment in renewables and things like EVs and green infrastructure. Now, those sorts of things should boost things like aluminium and copper and some supply disruptions in those metals should also protect any price downside.”

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This was the bad news aspect of the Australian Bureau of Statistic’s release of GDP data for the June quarter, which revealed that for that period, economic growth was at 0.2% – a figure which represented eleven consecutive quarters in the green, and the same reading as for the March quarter of this year, and 2023’s December quarter.

The June quarter figure was largely in-line with expectations.

However, the consistently weak readings across several months has caused a pulling-down effect on the annual data, with the ABS saying that between June 2023 and June 2024, the Australian economy grew by only 1%.

ABS head of national accounts Katherine Keenan acknowledged this in her commentary following the data release.

“The Australian economy grew for the eleventh consecutive quarter, although growth slowed over the 2023-24 financial year,” she said.

“Excluding the COVID-19 pandemic period, annual financial year economic growth was the lowest since 1991-92 – the year that included the gradual recovery from the 1991 recession.”

Also concerning was the number for growth on a per-person basis – which was down by 0.4%, representing the sixth consecutive quarter in the red.

Household demand is unsurprisingly the main factor underpinning this data, with this detracting 0.1 percentage points from GDP growth, while government consumption added 0.3 percentage points – the same contribution as seen in the previous quarter.

The latter represented continued strength in social benefits to households, while weak discretionary spending was the cause of falling household demand.

Indeed, household consumption – which fell by 0.2% in the June quarter – was at its weakest growth rate since the September quarter of 2021, impacted by the Delta-variant lockdown.

Discretionary spending was down 1.1%, following a rise in March. 

Spending on essential grew however by 0.5% during the June quarter, influenced by rent and other dwelling services expenses, as well as fuel costs – where spending was up 2.4% due to a reduction in rebates which had been provided during the quarter, and increased need for heating.

Food spending was down 1% as people turned to less expensive options.

Saxo Head of FX Strategy Charu Chanana said the readings were not the market’s main focus for today, but still something to watch.

“Today’s Aussie GDP data isn’t enough to take the focus away from global risk-off activity,” she said.

“There’s a curious case here as to how long the Australian economy can avoid a slowdown if global growth is headed lower.”

Quarterly GDP rose just 0.1%, which is the slowest pace of GDP growth in one-and-a-half-years. 

As far as the sectors went today, Telecommunications led, gaining around 2%. Materials felt some pain, shedding more than 1.1%  

In that telecommunications sector, Seek (ASX:SEK) was one of the best performers, up nearly 5% on news it’s selling all of its Latin American assets.

It’s selling OCC Mexico and Brasil Online to Red Arbour Holding in a $127.7 million deal (US$85 million).

The disposals will result in a net loss after tax of up to $35 million dollars, however, the proceeds will reduce Seek’s debt position. 

Seek closed at $23.78.

The Calmer Co (ASX:CCO) jumped 116% on reporting its ecommerce sales are up 45 per cent to $16,000 a day. It reported 10 months of consecutive sales growth, including across its Coles supermarket lines.

The Calmer Co closed at 1.3 cents.

And radio pharmaceutical company, Cyclopharm’s (ASX:CYC) gained 21% on news its FDA-approved nuclear medicine diagnostic ventilation imaging agent Technegas will receive full and direct government reimbursement.

It’s been granted what’s called Pass-Through Status from CMS, the US government authority which sets healthcare rebate rates.

Cyclopharm closed at $1.69.

BHP Group (ASX:BHP) shed a further 0.85% today, after both iron ore and copper prices turned down internationally last night. There’s more iron ore coming from South Africa and some analysts tip there could be a further negative price correction.

BHP closed at $43.90. It wasn’t alone amongst the commodity giants: Fortescue (ASX:FMG) also shed .8% and Rio Tinto (ASX:RIO) fell further – dropping about 1.5%.

Immutep (ASX:IMM) was down nearly 9% after announcing it’s raising over $100 million – mostly through an institutional placement raising $89.6 million at 38c a share.

It’ll open a retail entitlement to raise the remaining $10.6 million on Friday. The funds are to progress Phase III clinical trials for its lung cancer and Phase II breast cancer treatment.

Shares were holding up above the raise price though… closing at 41 cents.

And 5E Advanced Materials (ASX:5EA) dropped 2.2% on the resignation of its chief executive officer, Susan Brennan, who was in the position for 13-months.

The boron and lithium company is working in Southern California. Its CFO Paul Whyble (Weibel) will step into the role immediately.

5EA closed at 22 cents.