Australia's Economy Unexpectedly Expanded

Australia’s economy has defied a global recession that has swamped the U.S., the U.K. and Japan, unexpectedly expanding in the first quarter on rising exports and consumer spending.

Gross domestic product rebounded to grow 0.4 percent in the three months to March 31 after it contracted a revised 0.6 percent in the fourth quarter, the Bureau of Statistics said in Sydney today. The median estimate of 18 economists surveyed by Bloomberg was for a 0.2 percent decline.

Australia, helped by record interest-rate cuts, government spending and cash handouts to consumers, is one of only a few economies including China and India that expanded last quarter. Central bank Governor Glenn Stevens left the benchmark interest rate unchanged at 3 percent yesterday for a second month amid signs the economy is weathering the worst global slump since the Great Depression.

Reports published in the past month show company profits fell 7.2 percent last quarter, and business investment tumbled at the fastest pace on record, dropping 8.9 percent from the previous three months. Unemployment has climbed to 5.4 percent in April from 3.9 percent in February 2008 as companies such as Qantas Airways Ltd. fire workers.

Consumer spending advanced 0.6 percent in the quarter, adding 0.3 percentage points to GDP, today’s report showed. Exports increased 2.7 percent.

Prime Minister Kevin Rudd, who said in April that the country’s economy is in its first recession since 1991, began distributing more than A$12 billion ($9.9 billion) in March to low- and middle-income earners.

Retail sales rose 1 percent in the first quarter, a report showed on May 6. Sales also gained in April.

Among other evidence that Australia is weathering the global slump, reports this week showed building approvals jumped twice as much as economists forecast in April, new homes sales gained for a fourth month and manufacturing shrank at a slower pace.

A government report yesterday showed the current account deficit narrowed in the first quarter as agricultural exports surged. The contribution from overseas shipments to Australia’s economy, or net exports, added 2.2 percentage points to GDP in the March quarter, the statistics bureau estimated.

Australia, Bloomberg
6/2/2009 10:48:06 PM