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Stormy politics hits economic growth

AAP logoAAP 5/12/2016 Colin Brinsden, AAP Economics Correspondent

Economists fear the Australian economy went backwards during the September quarter, which if correct will be a jolt for Malcolm Turnbull's government after going to this year's polls on a mantra of "jobs and growth".

It would explain the subdued employment growth in recent months.

Analysts downgraded their already sombre economic growth forecasts for Wednesday's national accounts after weak exports and government finance figures on Tuesday, with some predicting a negative quarterly result, which would be the first since March 2011.

Back then the contraction was the result of adverse weather events domestically and earthquakes in neighbouring New Zealand and Japan, Australia's second-largest trading partner.

This time around it looks like being the impact of stormy political events - Brexit, the uncertainty over the US election and Australia's own eight-week election campaign, the longest in living memory.

However, it has been 25 years since there has been two consecutive quarters of negative economic growth, which constitutes a recession.

Even a flat quarterly economic growth outcome, as some predict, would send the annual rate reeling to 2.3 per cent after striking a perky 3.3 per cent rate as of June.

If the economy did go backwards, Commonwealth Securities chief economist Craig James said it will serve as a wake-up call for Australia's politicians.

"The message from consumers and businesses is that the major parties need to flesh out reforms, especially on taxation, that will give Australians confidence to spend, invest and employ," he said.

However, such concerns weren't enough to stir the Reserve Bank into action at its final board meeting of the year, leaving the official cash rate at a record-low 1.5 per cent.

Central bank governor Philip Lowe said the economy is continuing its transition following the mining investment boom.

"Some slowing in the year-ended growth rate is likely, before it picks up again," Dr Lowe said in a statement, pointing to a future pick-up in exports as completed resource projects come on line.

The RBA's next meeting is in February.

A new poll found the economy is front and centre of people's minds heading into 2017, whether it be jobs, growth or the budget deficit.

The latest Newspoll found more than one in three respondents nominate jobs and growth as their key concern as 2016 draws to a close.

Fretting over the budget deficit is next best, cited by 16 per cent.

With underemployment at a record high and 700,000 people unemployed it was little wonder people are crying out for a jobs plan, opposition employment spokesman Brendan O'Connor said.

"The jobs and growth slogan of the prime minister didn't do well in the election campaign and I don't think people see anything underneath it," Mr O'Connor told Sky News on Tuesday.

But Prime Minister Malcolm Turnbull insists his government has been able to get one element of its economic plan after another through the parliament.

"I'm committed to delivering strong economic growth and great jobs, more jobs and better jobs for all Australians," he told reporters in Sydney.

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