Australia | Jun 02 2010
By Chris Shaw
The pace of growth of the Australian economy slowed in the first quarter of 2010, with a post-stimulus result of 0.5% for the period being in line with expectation.
The March quarter number was driven by public investment, which contributed 0.7 percentage points of growth in the period. Housing spending added 0.3 percentage points and inventories 0.2 percentage points, but net exports detracted 0.5 percentage points from the overall figure.
Westpac points out the detail of the result was also largely as anticipated, the only mild surprise being an upward revision of fourth quarter growth last year to 1.1% from 0.9% previously.
According to ANZ Banking Group senior economist Amber Rabinov the result showed the economy remained dependent on the public sector for growth, though the prospect is for a rotation towards private sector demand in coming quarters.
Westpac agrees, pointing out as an example there is likely to be a strong rise in coming quarters in dwelling construction given the surge in dwelling approval numbers through 2009. Rabinov also sees engineering construction picking up, while household consumption is expected to make a modest contribution to growth as well.
Post the March quarter numbers there is no change to ANZ's view aggregate growth in the Australian economy will accelerate to an above trend rate heading in 2011. This is no great surprise as Westpac suggests the March quarter result would have largely met the expectations of the Reserve Bank of Australia (RBA).
Given the number met market expectations there was little reaction on foreign exchange markets, Westpac noting the Aussie dollar bounced only slightly against the US dollar on the back of the data.