A surge in exports helped Australia’s economy expand in the fourth quarter of 2012, reinforcing the importance of the country’s resource industry.
Gross domestic product rose 0.6 per cent quarter-on-quarter in the final three months of the year, a gain that matched market expectations. From a year earlier, the economy grew 3.1 per cent, close to its long-term average.
“Australia has now had 21 years of continuous GDP growth, which is a feat unmatched by any other OECD economy over that period,” said Paul Bloxham, economist at HSBC.
The figures highlight the importance of the resource sector to the Australian economy, which employs – directly or indirectly – almost 10 per cent of the country’s workforce and accounts for nearly a fifth of GDP.
Exports were the largest contributor to growth in the quarter, rising 3.3 per cent – the second fastest quarterly increase in almost a decade – according to the Australian Bureau of Statistics. This was driven by sharp rises in shipments of coal and iron ore, Australia’s most valuable exports.
But economists said the GDP data underscored the task facing the Reserve Bank of Australia as it attempts to rebalance the economy.
Resource investment is expected to peak this year at about 8 per cent of GDP and Australian policymakers are looking to non-mining parts of the economy such as homebuilding to fill the gap left by slower growth in the mining industry.
In an attempt to stimulate domestic demand and offset the effects of the persistently strong Australian dollar, the RBA lowered its benchmark cash rate by 125 basis points to 3 per cent in the past year. However, the easing in monetary policy has yet to gain traction.
This was evident in Wednesday’s GDP data, according to economists who pointed to the “striking” weakness in consumer spending. Household consumption rose just 0.2 per cent quarter-on-quarter, while the household savings ratio remained above 10 per cent. Set against that, housing investment increased 2.1 per cent, the fastest quarterly growth since 2010.
“While we would agree the data are good enough on the surface to see the RBA keep the rates steady, we would caution against calling an inflection in the [rate-cutting] cycle, given that the composition of activity in the fourth quarter highlights precisely the growth constraints the economy will face this year,” said JPMorgan economist Ben Jarman.
The RBA expects GDP growth to be below trend at about 2.5 per cent over 2013 before picking up to just under 3 per cent over 2014. On Tuesday, the central bank left its cash rate on hold at 3 per cent, saying that it was prudent to wait and judge the full impact of the recent “significant” easing in monetary policy.
“Though the full impact of this will still take more time to become apparent, there are signs that the easier conditions are having some of the expected effect,” RBA governor Glenn Stevens said.