Australia’s economy shrugged off a cyclone powered bad-weather hit to exports and home building in the first quarter, posting just enough growth to claim nearly 26 years without a recession – equalling the Netherlands’ 103-quarter record. Data from the Australian Bureau of Statistics on Wednesday showed gross domestic product (GDP) grew at annual rate of 1.7 per cent – the slowest since third-quarter of 2009 when it clocked 1.2 per cent.
The local dollar gained a third of a US cent after gross domestic product (GDP) matched expectations of a 0.3 per cent rise in the first quarter, from the fourth when it ran at 1.1 per cent.
Australia hasn’t seen a recession since 1991 and its run of growth had been the envy of other rich nations although it is dropping off the pack now with both the Britain and the United States clocking 2 per cent annual growth in the first quarter.
Output for the 12 months to March was A$1.72 trillion ($1.28 trillion) in current dollars, or about A$71,053 for each of Australia’s 24 million people. Growth took a knock from Cyclone Debbie, which hit northern parts of Queensland state late in March and caused widespread flooding in the coal-heavy region, disrupting rail haulage for several weeks. Negative net exports subtracted 0.7 percentage points from GDP.
The Reserve Bank of Australia (RBA) on Tuesday conceded economic activity slowed in the March quarter when it held interest rates at a record low 1.50 per cent. However, it expressed confidence growth would pick up over the next couple of years to be above 3 per cent.
So far, investors seem convinced the RBA is done with its five-year easing campaign. Futures prices imply a small chance of another rate cut by December. There were doubts around domestic consumption though as households are being burdened by record-low wage growth and high levels of mortgage debt. Household final consumption expenditure rose 0.5 per cent driven by rises in rent, electricity and gas.