Australia and New Zealand combined will see 1.9% to 2.6% GDP growth in the 1st Q of 2023):
Australia and New Zealand were both experiencing a brief period of infrastructure, new housing, and commercial and industrial construction growth after the COVID 24-month period. This growth has started to slow down in the last four months as energy and oil-related costs started to impact construction materials and ocean freight/transportation costs.
Construction is one of the top 5 industries in Australia and represents approximately 10% of the country’s annual GDP, the value of construction work each year is in the $350 to $400 million range, and the industry employs between 1 and 1.25 million individuals.
Skyrocketing inflation presents a massive challenge to the Australian and New Zealand economies. Australia is forecast to see construction-related inflation in the 6.7% to 7.8% range for the 1st Q of 2023, and New Zealand is looking at 4.6% to 5.2% for the same period.
Australia’s economic relationship with China has seriously cooled down in the last 24 months. This issue is related to China’s South China Sea territorial claims that Australia is criticizing. This dispute will impact Australian mineral exports and could affect future mining-related projects. The recently announced AUKUSA nuclear submarine deal has upset China. While it’s early days for the AUKUS program, the pact will bring several critical technological benefits to Australia.
Overseas – ocean f* air freight costs have increased by more than 30% in that 12 months. This, of course, will impact imported materials and capital goods into Australia and New Zealand.