Australia yesterday hailed as “remarkable” the 1.3 per cent growth in its mining-driven economy in the first three months of 2012, as consumer spending rallied and business investment boomed.
The Australian Bureau of Statistics said the quarter-on-quarter expansion, compared with an upwardly-revised 0.6 per cent for the final quarter of 2012, took annual growth to 4.3 per cent.
Both figures overshot forecasts of 0.7 per cent and 3.4 per cent respectively in a performance driven by rallying consumer spending and business investment, which offset weak exports.
Treasurer Wayne Swan described the data as “stunning” proof of Australia’s world-beating economic strength, with annual growth at its fastest pace since before the global financial crisis more than four years ago.
“Today’s national accounts paint an extraordinary picture of exceptional growth in the March quarter putting our economy in a league of its own, despite ongoing global turbulence,” Swan said of the “remarkable outcome”.
But analysts warned against too much optimism, saying the figures were likely to be an “aberration” given the weakening in conditions since March.
“Our assessment is that it would be very dangerous to assume that this sort of growth will continue,” said AMP Capital chief economist Shane Oliver. “Sure, the mining boom has a way to go, but more timely data for April and May suggest that retailing, housing related activity, manufacturers and services sectors are continuing to struggle.”
The central bank has slashed interest rates by 75 basis points to 3.50 per cent since the last growth reading in a bid to stimulate the sluggish non-mining part of the economy, which has slowed on fears over European debt.
Business investment was bolstered by “exceptional” growth in engineering construction linked to the nation’s unprecedented resources boom, with 20 per cent growth in the quarter and more than 50 per cent in the past year.
Swan said there was a record pipeline of investment, with firms expecting to spend Aus$173 billion (€136.77 billion) in the 12 months to June 2013 – an increase of 23.5 per cent from the same period last year.
The total planned pipeline of resources investment had now reached “half a trillion dollars, with more than half of these projects at an advanced stage”, he added.
The Australian dollar jumped half a US cent on the news, hitting 98.28 US cents from an earlier 97.76 US cents, and climbed to 98.37 US cents in late trade.
Mining continued to underpin growth in the resources-rich nation, increasing 2.3 per cent in the quarter and contributing 0.2 per cent to gross domestic product, according to the ABS.
Exports fell 1.3 per cent in the quarter as cyclones hit iron ore exports from the west coast, global economic conditions softened and the high Australian dollar impacted trade-exposed industries.
The terms of trade – the value of exports versus imports – slumped 4.3 per cent in the quarter as commodity prices eased, but Swan said they “remain close to record highs” and would likely stay there due to strong Asian demand. Canberra expects growth of 3.25 per cent in 2012-13 and three per cent each of the following three years, while the Reserve Bank of Australia has tipped growth of between 2.5 and 3.5 per cent.