Sydney: Australia’s economy squeezed out just enough growth last quarter to match the Netherlands’ record of 103 quarters without recession, but its stamina is in doubt as households struggle with paltry wage rises and punishing debt.
Government data out yesterday showed gross domestic product (GDP) rose a pedestrian 0.3 percent in the first quarter, a pullback from the previous quarter’s rapid 1.1 percent.
Yet that growth allayed fears of an outright contraction and helped lift the local dollar a third of a US cent to a one-month high of $0.7542.
“The Australian economy has had to contend with a lot of factors in the past year – geopolitics, weather events, the on-going unwinding of the mining construction boom and variable housing markets,” said Craig James, chief economist at CommSec.
“Economic growth has trekked a zig-zag path but the bottom line is that the doomsayers will need to find another target.”
But the central bank expressed confidence growth would pick up over the next couple of years to above 3 percent, and held interest rates at a record low 1.50 percent where they have been since last August.
So far, investors seem almost convinced the RBA is done with its five-year easing campaign. The futures market implies a 16 percent chance of another rate cut by December.
Australia has not seen a recession since 1991 and growth regularly outpaced its peers in recent years. But that changed in the March quarter when annual growth braked to 1.7 percent, below the 2 percent achieved by the United States and Britain.
Data from the Australian Bureau of Statistics showed output for the 12 months to March amounted to A$1.72 trillion ($1.28 trillion) in current dollars, or about A$71,000 for each of the country’s 24 million people.
Treasurer Scott Morrison (pictured) blamed bad weather for much of the slowdown and argued things could only get better as the year progressed. Morrison launched his annual budget just a month ago and already its economic projections are looking ambitious.
Many economists suspect the current quarter will be marred by the giant cyclone that barrelled through Queensland in late March causing disruption to coal exports.
