Australia: GDP growth in the third quarter falls short of expectations
December 1, 2010
In the third quarter, GDP expanded 2.7% over the same period last year, which was down from the 3.1% increase observed in the second quarter (previously reported: +3.3% year-on-year). In addition, the third quarter reading came in below market expectations, which had seen the economy growing 3.4% in the third quarter. The deceleration compared to the previous quarter was due mainly to a weaker performance in the external sector, as the appreciation of the Australian dollar in the second quarter weighed heavily on exports. However, the domestic sector remained resilient, supported in particular by a pick-up in consumption. Private consumption expanded 3.2% over the same period last year, which was up from the 2.5% recorded in the second quarter, while fixed investment grew 6.8%, down from growth of 7.5% experienced in the second quarter. Meanwhile, the contribution from the external sector to overall growth deteriorated compared to the previous quarter, as imports grew more than exports. Exports increased 4.2%, down from the previous quarter 8.6% rise and imports grew 12.9%, which was down from the 17.8% increase recorded in the second quarter. As a result, the net contribution from the external sector to overall growth inched down from minus 1.7 percentage points in the second quarter to minus 1.8 percentage points in the third. A quarter-on-quarter comparison corroborates the deceleration seen in annual figures. The economy expanded 0.2% over the second quarter, which was down from the revised 1.1% expansion recorded in the previous quarter (previously reported: +1.2% quarter-on-quarter) . The paltry expansion marked the weakest quarterly result since June 2009. The Central Bank expects the economy to expand 3.5% in 2010 and 3.8% in 2011.
Author: Armando Ciccarelli, Head of Data Solutions