SYDNEY: Australia’s economy rebounded strongly in the December quarter, growing 1.1 percent to dodge a technical recession on the back of buoyant exports, government investment and household spending, data showed Wednesday.
The stellar bounceback followed a shock contraction of 0.5 percent in the three months to September—the worst result in eight years, largely due to bad weather hampering construction and mining.
The Australian Bureau of Statistics said the annual rate of growth was a faster-than-expected 2.4 percent, from 1.8 percent in the previous quarter.
Analysts had been expecting quarterly growth of 0.8 percent and annual expansion of 2.0 percent.
It meant Australia, which is transitioning from a mining investment boom to broader growth, avoided a technical recession — when the economy goes backwards for two quarters in a row.
“Our growth continues to be above the OECD average and confirms the successful change that is taking place in our economy as we move from the largest resources investment boom in our history to broader-based growth,” said Treasurer Scott Morrison.
“While this growth result is welcome, we must continue to remember that our growth cannot be taken for granted and is not being experienced by all Australians in all parts of the country in the same way.”
The Australian dollar jumped to 76.87 US cents from 76.45 US cents prior to the numbers being released.
ANZ said in a note that the result “confirmed that the weakness in Q3 was only temporary, and underlying momentum in the economy remains solid”.
Capital Economics chief Australia economist Paul Dales said the economy was firmly “back on track.”
“The decent rebound in real GDP in the fourth quarter doesn’t just dash any lingering fears that Australia was in a recession, but it also boosts hopes that the surge in commodity prices will trigger a rapid recovery,” he said.
“It means that Australia is back on track to record 26 years without a recession in the second quarter of this year.”
Soaring commodity prices, particularly coal and iron ore, have seen a marked turnaround in Australia’s trade position in recent months with exports providing a key source of growth in the December quarter.
Net exports added 0.2 percentage points to gross domestic product, having detracted from the growth rate in the previous quarter.
Despite subdued wages growth, household spending was also a key driver as consumers opened their wallets, contributing 0.5 percentage points, while public investment in things such as infrastructure added 0.3 percentage points.
Australia has avoided a recession for more than a quarter of a century. But the economy has charted a bumpy course in recent years since the end of the mining investment boom.
The central bank has eased rates by 300 basis points since November 2011—including two cuts in 2016—to support growth in non-resources industries.
Even so, non-mining business spending has been soft.
Commonwealth Bank chief economist Michael Blythe said the Reserve Bank should be happy with the growth numbers.
“There does not appear to be any need for extra interest-rate assistance,” he said.
Last month, the IMF said in a report that the Australian economy was resilient and enjoyed strong policy frameworks.
But it warned of “significant risks and uncertainties” ahead, including the rise in protectionist policies in the global economy and a significant slowdown in Australia’s main trading partners.