Australia’s economy slows in Q3 as stimulus fades
SYDNEY (AP) – Australia’s economy, insulated from the worst of the global downturn by lavish government spending, slowed in the third quarter as the boost from the first phase of the stimulus faded.
Gross domestic product rose 0.2 percent in third quarter from the previous quarter after a 0.6 percent rise in the April-June quarter, the official Australian Bureau of Statistics said Wednesday.
The growth was consistent with the latest forecasts from the Reserve Bank of Australia, the country’s central bank, but lower than many economists expected. The figure took growth to 0.5 percent for the year to September.
Commonwealth Bank chief economist Michael Blythe said the effects of cash handouts under the stimulus package had wound down, while spending on schools and other infrastructure that form another part of the plan have not kicked in yet.
“It shows the economy is only just keeping its head above water at the moment,” Blythe said.
Australia has weathered the global economic downturn better than most developed countries.
Helping support the economy was a 42 billion Australian dollars ($38 billion) stimulus package and consistent demand for the iron ore and other minerals that Australia exports to nations like China, Japan, and South Korea. Demand for those resources is expected to rise further in 2010.
Record low interest rates also played a role, though the central bank moved quickly to raise its benchmark cash rate once it became clear a recession in Australia had been averted.
“While economic conditions are clearly improving, today’s national accounts show that Australia’s economic recovery still has a way to go,” Treasurer Wayne Swan told reporters in Canberra.
Swan credited the economic expansion to the government’s stimulus spending.
“With the help of fiscal and monetary stimulus, Australia has continued to outperform and outgrow nearly all other advanced economies,” he said.