RBS's economists have this to say on today's numbers:
"The initial impact of the Queensland floods means the underlying number was much stronger than the headline result
Flooding began in Queensland late last year, disrupting coal production, reaching the worst point in January when three-quarters of the state was declared a disaster zone (there was also flooding this year in Victoria and northern New South Wales.
The Reserve Bank had estimated that this initial flooding would take 0.5% off Q4 GDP, with more taken off activity in Q1 when the floods dramatically worsened (we think that Q1 GDP may have contracted as a result).
This calculation looks broadly correct given that Queensland exports fell by 7% in Q4, which was the biggest fall in almost two decades and was likely driven by lower coal output (annual data show coal accounts for about 70% of exports). The other states saw exports rise in the quarter, so the floods likely did take an initial 0.5% off GDP.
This means that the underlying momentum in the economy is stronger than the headline number seems, with ex-floods growth of about 1.2%.
This tallies with the Treasurer's analysis, who said in his press conference today that ex-floods growth would have been 1.1%."
