Australian Economic Growth Accelerates

Australia’s economy grew at the fastest pace in three years last quarter, stoked by China’s demand for iron ore.

Gross domestic product advanced 1.2 percent from the first quarter, when it rose a revised 0.7 percent, the Bureau of Statistics said. Australia’s economy grew 3.3 percent from a year earlier.

China’s demand for iron ore and coal is prompting companies such as BHP Billiton Ltd. to expand production and mines, stoking an economy that was one of the few to skirt last year’s global recession.

Exports advanced 5.6 percent in the quarter, adding 1.1 percentage points to GDP, today’s report showed. Household spending increased 1.6 percent, contributing 0.9 percentage point to GDP.

Today’s report underscores Reserve Bank of Australia Governor Glenn Stevens’s view that the nation’s economy is expanding close to trend as income from exports surges, a key justification for raising borrowing costs six times between October and May.

Manufacturing in China, Australia’s largest trade partner, grew at a faster pace in August after the weakest gain since February 2009 in the previous month, signaling that the economy’s slowdown will be limited, a report showed today.

Reports yesterday showed the nation’s current-account deficit narrowed last quarter to the least since 2002, and retail sales and building approvals rebounded in July.

Australian Economic Growth Accelerates, Bloomberg
8/31/2010 11:04:57 PM