The Australian Bureau of Statistics announced today that the country’s Gross Domestic Product (GDP) rose by 0.6 per cent in the last quarter of 2012 and 3.1 per cent on a year-on-year basis. The q/q figures released are in line with previous growth expectations against the upwardly revised +0.7 per cent in Q3 from +0.5 per cent. Meanwhile, the y/y figures were slightly above the previous 3 per cent expectation.
The resources sector remains the primary contributor to this growth in the Australian economy. This is evident when we take a closer look at regional figures. Western Australia—the country’s mining capital—grew by 14.2 per cent on a y/y basis, compared to just 2.4 and 2.2 per cent growths in NSW and Queensland, respectively.
Thus, while the Bureau of Statistics paints a rosy picture of the Australian economy, the country still needs to do a lot of work to drive growth as a whole. Yesterday’s announcement by the Reserve Bank of Australia (RBA), for example, revealed only modest growth in private consumption and dwelling investments. Also, non-residential building investment and investments outside the resources sector are seen to have only a modest growth this year. As RBA Governor Glenn Stevens said, “[looking] ahead, the peak in resource investment is approaching. As it does, there will be more scope for some other areas of demand to strengthen.
Meanwhile, the Bureau of Statistics’ announcement helped boost the Australian dollar. It jumped to about 20 pips after the release, making it the strongest currency among its G10 peers, partly due to the weak USD as well as the report.
Other Developments
Later today, notable developments will come from the press conference to be given by the Bank of England’s (BoE) Chairman Mervyn King, as well as Bank of Canada’s (BoE) interest rate decision. Be sure to watch out for these announcements.
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