Still the lucky country: Aust GDP grows in March quarter

SYDNEY - The Australian economy expanded in the March quarter, thereby avoiding the arbitrary "two falls in a row" rule of thumb commonly used to define a recession.

Gross domestic product (GDP) rose by 0.4 per cent in the quarter in real terms, the Australian Bureau of Statistics said today.

That followed a fall of 0.6 per cent in the December quarter, which was a revision from the previously reported contraction of 0.5 per cent.

Growth through the year to March was 0.4 per cent.

At the end of last week, the consensus among economists was that GDP most likely fell in the March quarter, with a median forecast of a 0.2 per cent contraction.

However, figures from the ABS on Tuesday showing a big fall in imports and a solid rise in exports boosted growth by 2.2 percentage points - the biggest quarterly contribution from trade since 1961 - prompting many to revise their expectations upward.

So a rise in GDP for the March quarter was not exactly a surprise - although the size of the increase was bigger than the new median market consensus for a 0.2 per cent rise in the quarter and 0.1 per cent growth over the year.

The earlier trajectory of GDP was also revised upward, with bigger increases now recorded for the March 2008 and September 2008 quarters, and growth though 2008 now clocked at 0.8 per cent, rather than the previous estimate of 0.3 per cent.

The Australian economy has clearly been buoyed by fiscal and monetary policy stimulus, which has occurred earlier and has been more vigorous than in earlier economic slowdowns.

HOusehold spending, about two thirds of GDP, rose by 0.6 per cent in the March quarter, partly offsetting a 6.1 per cent fall in business investment and a 5.6 per cent drop in dwelling construction.

Ongoing demand for Australia's exports, and an import sector that has borne the brunt of slowing local demand, also helped.

The global economy will drag on growth, as will the higher Australian dollar exchange rate, so the economy is by no means out of the woods.

Accordingly, the "wait-and-see" stance of the Reserve Bank of Australia (RBA) should not be replaced by a view that further cuts in the cash rate can be ruled out.

- AAP
























SYDNEY - Australian gross domestic product (GDP) rose by a seasonally adjusted 0.4 per cent in the March quarter, the Australian Bureau of Statistics (ABS) said today.

This compared with a revised fall of 0.6 per cent in the December quarter versus a fall of 0.5 per cent previously reported. Today's news means that the technical definition of a recession - two successive quarters of economic contraction - is not met.

It also compared with an upwardly revised rise of 0.2 per cent in the September quarter of 2008.

Over the year to March 2009, GDP rose by 0.4 per cent.

The median market forecast was for a rise of 0.2 per cent in the March quarter, and an expansion of 0.1 per cent in the year to the end of the March quarter.

Market economists had previously forecast the economy to have contracted 0.2 per cent in the March quarter, but revised their predictions upward following the release of better-than-expected trade figures on Tuesday.

Household final consumption expenditure rose 0.6 per cent in the quarter and was up 0.8 per cent over the year to the March quarter, adjusted.

Total investment in dwellings fell 5.6 per cent in the quarter, adjusted, to be down 5.7 per cent in the year to the March quarter.

Total gross fixed capital formation fell 4.8 per cent in the quarter and was down 1.3 per cent over the year, adjusted.

Domestic final demand declined 1.0 per cent in the quarter and was 0.5 per cent higher over the year, adjusted.

Gross national expenditure (GNE) fell 1.0 per cent in the quarter and was down 1.4 per cent over the year, adjusted.

The ABS said changes to business inventories made a flat contribution to GDP growth of 0.0 percentage points in the March quarter and a negative contribution of 1.9 percentage points over the year, in adjusted terms.

It said changes to business inventories made a flat contribution to GDP growth of 0.0 percentage points in the March quarter and a negative contribution of 1.9 percentage points over the year, in adjusted terms.

The chain price index of domestic final demand, in original terms, rose 0.7 per cent in the March quarter and was 3.6 per cent higher over the year.

The seasonally adjusted GDP implicit price deflator fell 1.0 per cent in the quarter, compared to a rise of 0.3 per cent in the December quarter, to be up 5.1 per cent over the year.

The seasonally adjusted implicit price deflator for household final consumption rose 0.9 per cent in the quarter, up from 0.6 per cent in the December quarter, and was up 3.8 per cent over the year.

Farm GDP production, in chain volume measures, fell 2.5 per cent in the March quarter to be up 15.9 per cent in the year to the March quarter.

- AAP