Australia’s economy rebounded strongly in the June quarter with 1.2 per cent growth, beating expectations and reversing a contraction in the first three months of 2011 caused by wild weather.
Gross domestic product in the mining-powered economy increased 1.2 per cent from a revised 0.9 per cent contraction in the March quarter, and was 1.4 per cent stronger on-year, the Australian Bureau of Statistics said.
Economists had predicted 1.0 percent growth over the previous quarter and 0.7 per cent year-on-year.
The Australian dollar surged on the news to US$1.0570 from $1.0527, and the stock market also rallied.
Treasurer Wayne Swan said the figure showed Australia was back on track after the summer’s floods and cyclones, with “exports starting to recover and inventories being rebuilt”.
“Exports grew by 2.6 per cent in the quarter, largely driven by the rebound in iron ore exports which have now returned to their pre-flood levels,” Swan said.
“While coal exports have started to come back on line, flood waters are still affecting some mines which has led to a more protracted recovery.”
Mining profits jumped 15 per cent in the quarter, he added.
A surge in imports due to the strong local dollar detracted 0.5 percentage points from the otherwise solid figure, but Swan said household spending was surprisingly resilient, growing one per cent in the quarter.
The terms of trade – the difference in export prices and import prices – jumped 5.4 per cent on-quarter and 12.9 per cent on-year, due largely to high prices for Australia’s commodity exports.
They have more than doubled over the past decade, according to the ABS.
The export slump due to the summer’s flooding and cyclones sheared 2.2 percentage points from growth in the previous quarter, resulting in Australia’s first contraction since the depths of the 2008 financial crisis.
Growth backtracked 0.9 per cent in the final quarter of 2008 but rebounded strongly, making Australia the only advanced nation to dodge recession during the global downturn.
Analysts were cautious, warning that the latest result showed some underlying weakness and further softening was likely in the coming quarter given the recent deterioration in global and domestic conditions.
“I think it’s a mixed bag. On the face of it the numbers are quite solid, there’s a good buffer there,” said Shane Oliver, chief economist at AMP Capital Investors.
“But the momentum in the underlying economy is nowhere near what economists were generally expecting three to six months ago, and since then the global backdrop has deteriorated quite sharply,” Oliver told AFP.
Relatively high interest rates, held this week at 4.75 per cent, and the Australian dollar’s prolonged rally above parity with the greenback were dampening the non-mining economy, Oliver added.
Even the mining industry was not performing as strongly as hoped, with production almost flat and exports quite depressed, floods notwithstanding, he said. He tipped growth of 0.8 per cent for the next quarter.
But Swan insisted that the outlook was strong, with Australia’s economy a “stand-out performer despite the worst natural disasters in living memory”.
“Despite renewed global uncertainties and the patchwork pressures facing some of our sectors, this result is another reminder that we have a proven track record of resilience and we confront these challenges from a position of strength,” Swan said.