SYDNEY, (APP/AFP) – Australia’s economy is growing
at its fastest annual rate in four years, the government said
Wednesday, as it trumpeted a quarter of a century of continued
expansion.
Growth hit 3.3 percent from a year earlier in the second
quarter of 2016, with government spending helping to offset falling
trade as the economy shifts away from a decades-long
resources-led boom.
In the three months to the end of June, it expanded 0.5
percent with Australia now not seeing a recession since 1991,
making it one of the developed world’s best-performing economies.
“It’s official, Australia has now achieved 25 years
of uninterrupted economic expansion,” Treasurer Scott Morrison
said.
But while there was “much to welcome in these accounts
today”, he also warned it was no time for complacency.
“We continue to fight for every inch of growth in a
very challenging world economy,” he said.
A bumper quarter-on-quarter 1.0 percent expansion in the January-March period was driven by trade and household spending,
but falling exports — a key growth engine — were a drag for the
April-June number.
Over the three months, they took 0.2 percentage points from
GDP, but were offset by a 1.9 percent rise in government spending,
and a whopping 15.5 percent jump in public investment.
Consumer spending also grew, but its 0.4 percent quarterly
rise was the smallest in three years — a possible indicator that low
wage growth was starting to bite.
— Rate cut pressure eased —
=============================
The Australian dollar, which climbed ahead of the data, fell
slightly after the announcement to 76.58 US cents but soon recovered, clinging on to gains made overnight after soft US data raised doubts
about an imminent US rate hike.
Capital Economics’ chief Australia economist Paul Dales said
the quarterly growth was “a good result” and should ease pressure for
further interest rate cuts.
“The return of the Australian economy in the second quarter
to the growth rates seen before the end of the mining boom relieves
some of the pressure on the (central bank) to cut interest rates
again, at least in the next few months,” he said.
But he added that stubbornly low inflation, which fell to
a 17-year low of 1.0 percent in April-June, may still prompt a rate
cut to 1.0 percent next year.
The Reserve Bank of Australia on Tuesday held the cash rate
steady at a record low of 1.50 percent, having eased twice in the
past four months in a bid to boost prices.
National Australia Bank economists said in a note that
Wednesday’s data “continues to suggest reasonable growth across
the non-mining economy, despite some modest loss of momentum”.
“We do not expect any near-term shift in monetary policy,
but retain our view that two cuts will follow in mid-2017 in
response to the ongoing weak inflation and risk that the economy
slows too sharply in 2018,” they said.