Australia: GDP grows steadily in fourth quarter
March 2, 2011
In the fourth quarter, GDP expanded 2.7% over the same period the previous year, mirroring the result seen in the third quarter. The reading came in a tad below market analysts' expectations, which had the economy growing 2.8%. According to the Australian Bureau of Statistics (ABS), the fourth quarter result was only marginally affected by the consequences of the Queensland floods, which began at the end of December 2010. The economic impact of the event will be likely more reflected in Q1 2011 figures. Domestic demand (excluding inventories) weakened in the fourth quarter, adding 2.7% annually, which almost halved the 4.4% expansion seen in the third quarter. In particular, private consumption expanded 2.8%, down from the 3.3% increase recorded in the third quarter. Fixed investment experienced an even stronger moderation, expanding only 1.5% in Q4, which was considerably below the 6.5% increase registered in the previous quarter. On the other hand, the rebuilding of stocks positively contributed to the Q4 result. Exports accelerated from a 4.2% increase in the third quarter to a 5.1% expansion in the fourth, while imports rose 8.4%, down from the 13.7% increase recorded in the previous quarter. As a result, the net contribution from the external sector to overall growth stepped up from minus 1.9 percentage points in the third quarter to minus 0.7 percentage points. A quarter-on-quarter comparison suggests that growth accelerated in the fourth quarter, as the economy added 0.7% over the previous quarter, up from the paltry 0.1% expansion recorded in Q3. The Reserve Bank of Australia (RBA) currently expects the economy to grow 4.25% in 2011 and 4.0% in 2012.
Author: Armando Ciccarelli, Head of Data Solutions