Growth in Australia, the world's biggest exporter of iron ore and coal, may have slowed last quarter as commodity prices fell.
Australia says growth may have slowed
Growth in Australia, the world's biggest exporter of iron ore and coal, may have slowed last quarter as commodity prices fell, the treasurer Wayne Swan said before a government report on GDP this week.
"We shouldn't be surprised to see growth moderate from its above-trend pace in the first half of the year given the impact of difficult global conditions and the sharp decline in commodity prices," Mr Swan said in his weekly economic note.
A high local currency and consumers putting off purchases have also pressured parts of the economy, he said.
GDP probably expanded 3.1 per cent in the three months to September 30 from a year earlier, according to the median estimate of 25 economists surveyed by Bloomberg.
That is slower than an annual growth rate of about 4 per cent in the first half of the year. The Bureau of Statistics is scheduled to release GDP data on Wednesday.
Iron ore prices plunged to a three-year low in September, crimping export returns after waning demand from China, Australia's biggest trading partner.
"Despite the challenges, it's important to remember our economy remains resilient," Mr Swan said. "The pipeline of investment - along with our low unemployment, contained inflation and lower interest rates - provides a rock-solid foundation for our economy in the face of continuing global headwinds."
Australia has benefited from a Chinese-led commodity demand surge that has helped to galvanise the nation's economy during a global slowdown. While commodity prices have retreated from all-time highs, the value of committed resource projects has increased to a record of A$268 billion (Dh1.02 trillion), according to a report from the Bureau of Resources and Energy Economics.
Investment in mining and energy industries is offsetting Australia's manufacturers and retailers, which are battling headwinds of an elevated Australian dollar and restrained consumer spending.
The currency has advanced 16.2 per cent against the US dollar since the end of 2009, making it the biggest gainer among the Group of 10 countries tracked by Bloomberg.
The Reserve Bank of Australia meets tomorrow to decide interest-rate policy, and 19 of 28 economists surveyed by Bloomberg predicted a 0.25 percentage-point reduction in the overnight cash rate target to 3 per cent.
After five rate cuts totalling 1.5 per cent points from November 2011 to October, the central bank left the rate unchanged at 3.25 per cent at its November 6 meeting while considering "further easing may be appropriate in the period ahead," according to minutes of the gathering that were released November 20.