Mining exports drive Australian economy up

June 05, 2014 - 12:34:45 am

SYDNEY: The Australian economy expanded a better-than-expected 1.1 percent in the first quarter of 2014 with a strong rise in mining exports driving growth, data showed yesterday. Annual growth was 3.5 percent, the Australian Bureau of Statistics said, compared with analyst expectations of 3.1 percent.

Markets watchers expected growth in the three months to March to be 0.8 percent.

The Australian dollar rose by a third of a US cent to 92.92 US cents on the back of the strong quarterly figures, which followed a 0.8 percent expansion in the three months to December.

The mining sector made up 80 percent of growth in the March quarter as net exports contributed 1.4 percentage points to GDP.

Consumption added 0.3 percentage points, but some of the gains were partially offset by inventories, which subtracted 0.6 percentage points.

The improved GDP figures were foreshadowed by the Reserve Bank of Australia in its monthly meeting on Tuesday, where it held the cash rate at a record low of 2.5 percent for the 10th straight month.

Central bank governor Glenn Stevens flagged a “period of stability” in monetary policy in a cautiously optimistic statement about the Australian economy.