Financial News: Australia GDP Growth Tops Expectations

Australia GDP Growth Tops Expectations

(RTTNews) - Australia's economy logged a faster-than-expected growth in the fourth quarter underpinned by exports and government spending, data from the Australian Bureau of Statistics revealed on Wednesday.

Gross domestic product climbed 0.6 percent sequentially in the December quarter, following a 0.3 percent rise in the September quarter. GDP was expected to grow 0.5 percent in the fourth quarter.

On a yearly basis, economic growth accelerated to 1.3 percent from 0.8 percent in the third quarter. This was also above forecast of 1.2 percent. "Modest growth was seen broadly across the economy this quarter," Katherine Keenan, ABS head of national accounts, said.

"Both public and private spending contributed to the growth, supported by a rise in exports of goods and services," Keenan added.

Household spending expanded 0.4 percent sequentially. Spending on essentials such as rent and health continued to be one of the biggest contributors to spending growth. At the same time, growth in government spending moderated to 0.7 percent.

Private investment rose 0.3 percent but private investment in dwellings fell 0.4 percent. Public investment showed a moderate growth of 1.8 percent.

Net trade contributed 0.2 percentage points to GDP growth as exports rose 0.7 percent, which was partly offset by a 0.1 percent rise in imports.

Capital Economics economist Abhijit Surya said as long as inflation continues to moderate, the Reserve Bank of Australia should be in a position to ease policy settings just a bit further.

However, the case for substantial policy loosening remains weak, the economist noted.

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