Business worried over soft growth figures

Colin Brinsden
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JOSH FRYDENBERG NATIONAL ACCOUNTS PRESSER

Treasurer Josh Frydenberg is upbeat about the economy despite others saying it could be better

Prime Minister Scott Morrison is pleased with the pick-up in annual economic growth, but business groups are far from happy, saying it should be seen as "a call for action".

The latest national accounts released on Wednesday showed the economy expanded by 1.7 per cent in the year to September compared to a previously reported 1.4 per cent as of June - a decade low.

"I am pleased through-the-year growth has increased as a result of these latest numbers," Mr Morrison told reporters in Canberra, adding it put Australia in a very strong position compared to other countries.

It perhaps backed Reserve Bank governor Philip Lowe's view that Australia has reached a "gentle turning point", although financial markets are predicting a further interest rate cut next year given the limp quarterly result in the figures.

Growth in the September quarter was weaker than economists had expected at just 0.4 per cent after an upwardly revised 0.6 per cent in the June quarter.

Economic growth is still well short of the 2.75 per cent predicted for the financial year when Mr Frydenberg handed down his pre-election budget in April.

The treasurer told reporters the government will review the forecasts in the mid-year budget update, which is due before Christmas.

"But the story today is that despite the headwinds, domestic and international, we see the Australian economy continuing to grow," Mr Frydenberg said.

Business Council of Australia chief executive Jennifer Westacott said productivity growth also remains weak and business investment is still in the doldrums.

"Political leaders must now double down to deliver reforms that deliver strong and sustained economic growth through a vibrant private sector economy," Ms Westacott said in a statement.

Australian Chamber of Commerce Industry chief economist Ross Lambie agreed.

"Businesses need policies that assist them to lift productive capacity through investing in skills, technology and infrastructure," he said.

Australian Bureau of Statistics chief economist Bruce Hockman said the rate of growth remains "well below the long run average".

Shadow treasurer Jim Chalmers said the national accounts were a "total humiliation" for the treasurer and prime minister.

"It torpedoes the government's economic credibility because at every turn Josh Frydenberg and Scott Morrison have been saying there is nothing to worry about here," Dr Chalmers said.

The main contributions to growth in the quarter came from exports and government spending, while the household sector remained subdued despite three interest rate cuts and billions of dollars worth of income tax cuts.

As of December 2, the tax office had issued over 8.8 million in individual income tax refunds for the 2018/19 financial years with a total value of $24.8 billion.

The central bank left the official cash rate at a record low 0.75 per cent at its monthly board meeting on Tuesday.

Financial markets believe there is a 50/50 chance the Reserve Bank will be forced to cut the cash rate to 0.50 per cent in February after the board's summer recess.