The “Land Down Under” saw the economy expand more than expected over the third quarter despite arguments of China’s slowdown deeply impacting the Australian economy. The Australian Bureau of Statistics revealed that gross domestic product surpassed the second quarter growth value of 0.30% with an outcome of 0.90% in the three months to the end of September. The gains were led in large part by a sharp increase in the mining sector, recording a rise of 5.20% during the period, effectively increasing net export values which contribute to 1.50% of the aggregate GDP figure. Exports rose by 4.60% in the third quarter, a rate not seen for nearly 15 years. The third quarter annualized GDP figure increased to 2.50%, beating expectations of 2.40% growth and outstripping the previous quarters GDP 1.90% indication by a wide margin. Australian Government officials compared the country’s data and stated that the levels recorded amount to double the rate of Canada’s GDP while exceeding all other G7 countries and printing well above the average for members of the Organization for Economic Cooperation and Development.
Another factor brought forward as a strong contributor to the gains was the household consumption momentum acceleration as monetary policies imposed on the nation made borrowing cheaper across the board. Despite the fright surrounding China’s ongoing slowdown, these developments did not greatly impair the country’s near-term growth. Weakness in China is not the only concern considering the recently recorded drop in private capital expenditures which should be viewed with extreme caution. It may serve as a strong indication that commodity prices are set to remain weak over the medium-term without any catalyst for rebuilding crashing global trade. Australia’s top central bankers recited the country has been through some difficult times but the general performance is mostly based in mining and the recent economic rebound could be early green shoots of a longer-term recovery. RBA Governor Glenn Stevens noted on Wednesday that the growth figures were not a bad outcome. He expressed that while 7-months of highly accommodative policies have helped the economy hold up amid weak external conditions, inflation remains weak, likely necessitating further easing in policy.
Australian GDP Surprises
Market Trends - 02/12/2015