Perspective with Heather du Plessis-Allan: Is there a bright side to all the bad economic news?

I’m sorry to say it’s a bit of a bad day - a day of rather unpleasant economic news, I’m afraid.

Let’s start with the GDP number. It came in at 0.2 percent for the final quarter of last year, which is very much at the low end of expectations. We were looking for something in the range of 0.2 percent to 0.5 percent, with 0.5 percent being the Reserve Bank’s forecast.

The problem with that is those were the good times. That number was recorded before the Iran war kicked off, so it’s not much of a place to be starting from, is it?

Now the good news is that at least we are recovering. Yes, it’s slow - it’s grinding - which we always knew it would be but it is real. We recorded 1.3 percent growth for the year. That’s not a lot, but it is growth and it marks the first time in more than two years that the economy has posted annual growth.

Because the GDP result is at the low end, it also gives the Reserve Bank a bit more latitude when it comes to its OCR decision. It can look through the inflation spike that the Iran war will almost certainly cause, which means it doesn’t need to be in such a hurry to raise the Official Cash Rate in response.

The second piece of bad news today is that the war has escalated. Israel has struck Iran’s oil fields, pushing the price of oil past US$110 a barrel.

It’s noticeable that the Government’s tone has shifted on fuel supply. In an update, officials sounded far less relaxed about fuel availability into the medium term - around eight weeks out - than they did earlier in the week.

There is, again, a small piece of good news here. We are largely reliant on South Korea and Singapore for our oil and they are still supplying their customers. Australia, by contrast, is much more reliant on China - and China has banned exports.

So, if we’re looking for a bright side: our supply situation looks better than some and at least we are growing. That gives us some reason not to panic on a day of not-so-great economic news.

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