AUSTRALIA’S much-vaunted economy grew at its slowest pace in a decade last quarter as cash-strapped consumers went on strike, an urgent argument for more monetary and fiscal stimulus as headwinds mount globally.

Gross domestic product (GDP) rose just 1.4 percent in the June quarter from a year earlier, data showed yesterday, matching the worst of the global financial crisis and well short of the 2.75 percent considered “trend.”

The downbeat report poses a challenge for Prime Minster Scott Morrison who won election in May largely based on a pledge that growth would be stronger on his watch.

Yet responding to the data, Treasurer Josh Frydenberg remained committed to delivering a budget surplus and said any new fiscal steps, including on business investment, would not come until the budget in May next year.

The Reserve Bank of Australia (RBA) has called for fiscal action, as it cut interest rates in both June and July to reach an historic low of 1 percent.

The monetary easing has sparked a much-needed revival in house prices, but home construction remains in a deep hole and consumer spending has yet to show any recovery.

The central bank concluded its September policy meeting this week by saying it would ease further if needed, and highlighted new risks from the escalating Sino-U.S. trade dispute.

Investors already believe a quarter-point cut by November is a done deal, with another pencilled in by March.

“There are powerful structural headwinds from weak wages growth and productivity, constraining consumer spending. The global economy is slowing and downside risks have intensified,” warned Westpac senior economist Andrew Hanlan.

“The risk is that growth remains below trend over the remainder of 2019 and through 2020.”

Westpac is tipping a rate cut as early as October.

If there was a bright spot in yesterday’s numbers, it was that quarterly growth of 0.5 percent matched market forecasts, when there had been fears it would be even weaker.

Over the year to June, gross domestic product amounted to A$1.95 trillion (US$1.32 trillion) in current dollars, or about A$77,000 for each of Australia’s 25 million citizens.

Yet almost all the growth came from government spending and exports, with domestic consumption hamstrung by miserly wage gains and a sharp downturn in home building. (SD-Agencies)