Australia's economy grew a moderate 0.5 per cent last quarter thanks to a fresh burst of business investment, but lower export revenues, government cutbacks and a cresting mining boom mean tougher times may lie ahead.
The September quarter growth followed a 0.6 per cent rise in the June quarter, taking the growth for the year to September to 3.1 per cent, figures from the Australian Bureau of Statistics showed today. This marked a slowdown from the 3.7 per cent rate in the year to June and a sharp decline from the 4.4 per cent to March.
Slowing economy points to difficult year ahead
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Slowing economy points to difficult year ahead
Economic growth moderated during the September quarter, growing by 0.5 per cent. Peter Martin expects growth will slow further next year.
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The 0.5 per cent result was slightly below expectations, with a Bloomberg survey of economists predicting a 0.6 per cent rise in the September quarter. The year-on-year rate was in line expectations.
The Australian dollar fell minimally to $US1.0475 following the 11.30am AEST announcement.
HSBC’s chief economist Paul Bloxham said the figures showed the government’s push to return the budget to surplus was a drag on the Australian economy.
‘‘Mining investment was still a strong contributor to GDP growth in the quarter, but we’ve seen public demand has fallen quite sharply. So the government’s plans to get back to budget surplus this year are having a contractionary impact on the Australian economy,’’ Mr Bloxham said.
‘‘Growth seems fairly uneven across the economy and the signs of rebalancing in the economy are still tentative at this stage."
The 3.1 per cent result for the year remained a faster pace of growth than almost any other developed nation, but analysts suspect a slowdown will be hard to avoid next year.
Macquarie senior economist Brian Redican said the strength of the mining sector was tiding Australia over for the moment, but the economy was likely to weaken in the months ahead.
‘‘This is a fairly sluggish rate of growth, even with mining investment adding to growth, and before the major fiscal cutbacks begin to come through,’’ he said.
‘‘Those cuts are starting to have an impact, but a negative impact, particularly from mining, is just going to get larger through 2013.’’
Mr Redican said rate cuts from the Reserve Bank of Australia could provide some relief, but previous rate cuts had taken a long time to filter through the economy.
Stephen Walters, chief economist at JP Morgan, described the result as "okay" but said it could have been "a lot softer".
"There's still a substantial amount of mining investment still to be done and the RBA's been cutting rates for more than a year now, so they will eventually get traction from that, so I think (the probability of a recession in Australia is) pretty low."
'Meeting the challenge'
Federal Treasurer Wayne Swan said in a press conference today that the government was committed to returning the budget to surplus in 2012/13. But he acknowledged the data showed revenue had been affected, saying that ‘‘the task will be harder’’.
But Mr Swan said that the national account figures "shine a light on the resilience of Australia's economy in the face of challenging global headwinds".
"We have around-trend growth through the year of 3.1 per cent, seeing our economy outpace every single major advanced economy," he wrote in a tweet.
"Today’s figures also show more than $1 trillion dollars of business investment has occurred in our economy since this [government] came to office."
The ABS data showed that household final consumption expenditure rose 0.3 per cent in the September quarter and was up 3.3 per cent over the year to September, adjusted.
Total investment in dwellings rose 0.7 per cent in the quarter to be down 6.3 per cent in the year to September.
Total gross fixed capital formation rose 0.4 per cent in the quarter and was up 4.5 per cent over the year. Domestic final demand rose 0.2 per cent in the quarter and was up 3.7 per cent over the year.
In separate data out today, the sales of new vehicles were up a brisk 10.9 per cent in November from a year earlier, data from the Australian Federal Chamber of Automotive Industries showed, with consumers still ready to splash out on big ticket items despite being cost concious elsewhere.
With AAP, Reuters