Surprising slowdown in Aussie GDP in Q3
Print Edition
AUSTRALIA’S economy slowed more than expected in the third quarter, dragged down by falling private investment, data showed yesterday, in another sign of the nation’s rocky transition away from mining-led growth.
The economy grew by 0.3 percent in the three months to September, down from 0.5 percent in the previous quarter, to take the annual rate of growth to 2.7 percent, the Australian Bureau of Statistics said.
“These national accounts reflect, quite starkly, the resources sector switching from significant investment to significant production,” Treasurer Joe Hockey said.
“Iron ore production in particular has picked up more strongly than expected at budget time (in May). However, prices for iron ore and thermal coal, two of our biggest exports, have fallen dramatically in recent times.”
The new readings were well below analysts’ forecasts of 0.7 percent quarterly growth for a year-on-year rate of 3.1 percent, and sent the Australian dollar plunging three-quarters of a cent.
The local dollar fell from the day’s high of 84.69 US cents to a fresh four-year low of 83.92 US cents.
“There’s always two sides to a boom,” JPMorgan economist Tom Kennedy said. “We’ve had the good side of it, and now we are seeing a little bit of unwind from the investment boom.
“It looks like almost all of the surprise here is from the private capex front, which took off 0.5 (percentage points) from GDP and we were expecting a much smaller drag from that.”
Net exports supported growth, expanding by a seasonally adjusted 0.8 percentage points while consumer spending increased by 0.4 percentage points. But private capital spending slipped by 0.5 percentage points and public investment eased by 0.2 percentage points.
Australia’s economy is moving away from resources driven-growth amid an expected drop-off in mining investment, supported by the Reserve Bank’s decision to keep interest rates at a record low of 2.5 percent.
The mining investment boom has helped keep the economy out of recession for over two decades.
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