Australia’s Economic Growth May be Speeding Up in 2013


In the last quarter of 2012, Australia's economy grew at a moderate pace as pick-up in exports offset weakness in other sectors. More importantly, recent data suggests the growth might have quickened since the beginning of 2013 as interest rates cuts initiated in November of 2011 have finally started gaining traction.

In fact, in February, retail sales jumped 1.3 percent m/m and 3.2 percent y/y. Indeed, the government is hoping that eventually low borrowing cost will support construction activity and boost growth. In addition, exports, which are the main driver of Australia’s economic expansion, have been on the upward trend in the last few months. On the negative side, the unemployment rate, although still low by global standards, has been on the upward trend since June of 2012 and it is likely to trend higher as resource investment is expected to peak in 2013.


In the fourth quarter, the GDP rose 0.6 percent, compared to the previous three months when it grew an upwardly revised 0.7 percent. From a year earlier, the economy expanded 3.1 per cent, close to its long-term average.
 
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 5.1% in April from 110.5 in March to 104.9 in April. In April, the Reserve Bank of Australia decided to cut the cash rate by 25 bps to 2.75 percent, the lowest level on record.
     

In March, the unemployment rate increased to 5.6 percent. It has been on the upward trend since reaching 4.9 percent in June of 2012.
 
In the fourth quarter, exports were the largest contributor to the expansion, rising 3.3 percent, the second fastest quarterly growth in almost a decade. In March, shipments increased to 25746 Million AUD from 25598 Million AUD in February.

 


Anna Fedec, anna@tradingeconomics.com
5/7/2013 11:38:20 AM