Sean Aylmer

I'm Sean Aylmer.

Australia's economy slowed sharply in the March quarter with growth driven almost entirely by a surge in data centre investment, while consumers pulled back discretionary spending.

and productivity went backwards.

While the annual figure came in at 2.5%, the combined impact of higher interest rates, the Middle East conflict and a weakening housing market could drag growth even lower from here.

Paul Bloxham is Chief Economist, Australian, New Zealand and Global Markets at HSBC.

He used to work at the Reserve Bank.

Paul, welcome to Fear and Greed Q&A.

Great to be here.

Appreciate that the economic growth figures for the March quarter are backward looking, but what can you take from them?

Okay.

Before we get to this quarter and then the next quarter and interest rates, before we get there, a couple of months ago, all the talk was that the economy was actually stronger than we thought it was going to be, and we talked about the Reserve Bank.

It surprised everyone late last year in terms of its view on the economy being stronger.

There were certainly signs that the economy was stronger, but these numbers actually show that that might have been a bit of a false dawn, or am I overstating it?

Sure.

Okay.

Is a recession a real chance or not, given you think that we might be going backwards this quarter?

If we go backwards in the September quarter, you have two quarters of negative growth.

Therefore, we can call that a recession.

Is that a possibility?

What does the Reserve Bank do?