4 September 2007, 10:05  Australian second-quarter economic growth beat market expectations

Australian second-quarter economic growth beat market expectations buoyed by investment in new capacity to meet rising demand for commodities such as iron ore, coal and liquefied natural gas. ""What is leading the Australian economy at the moment is investment - we are are going through an investment surge," said Australia's chief economics minister Treasurer Peter Costello following the release of second quarter gross domestic product (GDP) data. The government data showed second-quarter GDP rose a seasonally adjusted 0.9 percent from the previous quarter and 4.3 percent from a year earlier. The outcome compared with economists' consensus forecast of growth of 0.9 percent for the quarter and 4.1 percent annually, according to Thomson IFR. Costello said growth in the quarter was higher than that of any G7 member country and came despite rural output being affected by drought conditions over much of eastern Australia. "New business investment is 13.3 percent higher through the year, new engineering construction investment grew 6.6 percent in the quarter and is 28.5 percent higher through the year," Costello told reporters after the data's release. "The outlook for business investment remains positive --- there is 23 billion dollars of engineering construction commenced but not yet completed". Investment represented about 28 percent of GDP which was among the highest it has ever been in Australia, he said.Capital expenditure plans are strong, showing that it is intended by business to continue strongly next year - what this is doing is increasing the capacity of Australia and in these accounts we are finally seeing that investment come through in terms of growth." Costello said strong business investment is supported by strong profits which grew 16.8 percent through the year. But, he said, there are some risks to the economy including the impact of the credit market crunch and an outbreak of equine flu in Australia late last month which has disrupted horse racing in some eastern states. "The fall-out from the subprime crisis in the United States, instability in equity markets and interest markets has affected our economy and will continue to have an affect," Costello said. ANZ Investment Bank senior currency strategist Tony Morriss said the numbers showed that growth had come through investment in new capacity rather than rising household demand.

© 1999-2022 Forex EuroClub
All rights reserved