Australia’s economy grew by just 0.2% in the September quarter, far slower than the 0.4% growth rate predicted by economists.
But there is good news – the lower-than-expected growth rate may well convince the RBA to hold fire on interest rate rises in early 2010.
Australia’s annual economic growth rate now stands at 0.5%, lower than the 0.7% economists had tipped, and the 0.6% year-on-year rate recorded for the June quarter.
The ABS said growth was driven by a 0.7% increase in household expenditure and a 6.2% increase in public investment, underlining the importance of the Rudd Government’s stimulus package. On the other hand, private investment fell 0.9%, while exports fell 2.3% and imports rose 5.8%.
The rental, hiring and real estate services provided the biggest boost to growth during the quarter, according to the RBA.
Despite the sluggish growth figures, CommSec economist Craig James says it should be recognised that Australia has enjoyed 19 straight years of economic growth.
“The economy may be barely growing but it is much better than the sharp contraction recorded by our global peers over the last year. Annual growth of 0.5% is certainly a remarkable achievement when you consider the extent of the global financial crisis.”
“Looking forward, the Reserve Bank expects a return to trend growth, and we would concur. Clearly the strength in the housing construction will be the key growth driver for the economy over the next year. Importantly businesses investment is trickling back and government spending on infrastructure and investment in the resources sector is gathering pace.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
