The FINANCIAL — Australia’s resource-rich economy recorded its strongest quarter-to-quarter growth in a year as consumer spending picked up and export volumes rose, according to Nasdaq.
Gross domestic product rose by 0.9% in the first quarter from the fourth, and by 2.3% from a year earlier, a government report showed Wednesday. Economists had expected 0.7% growth on quarter and a 2.1% on-year increase. Quarter- to-quarter growth in the fourth quarter was unrevised at 0.5%.
The Aussie dollar climbed following the better-than-expected data, on bets the central bank may feel less inclined to make further cuts to interest rates from their current record lows.
The GDP numbers offer some relief to policy makers who had been concerned about the impact on growth of sharply lower commodity prices, a slowdown in China, weak consumer and business confidence, and an elevated currency.
Falling resource-industry investment is expected to hurt growth over the coming year as a decadelong mining boom cools. Meanwhile, the plunge in prices for iron ore, Australia’s biggest export, will continue to weigh on the economy for some time–adding to the pain from a still-elevated Australian dollar.
The GDP data showed encouraging signs that the eastern states of New South Wales and Victoria are beginning to grow more solidly, offsetting weakness in mining-dominated areas, particularly Western Australia.
Discussion about this post