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Australia's economic growth slower than expected | |
(about 7 hours later) | |
Australia has reported weaker-than-expected economic growth between July and September, due largely to a drop off in mining investment. | Australia has reported weaker-than-expected economic growth between July and September, due largely to a drop off in mining investment. |
Its economy grew 0.3% in the third quarter, compared to the previous quarter, and was up 2.7% year-on-year, according to official numbers. | Its economy grew 0.3% in the third quarter, compared to the previous quarter, and was up 2.7% year-on-year, according to official numbers. |
Economists had expected quarterly growth of 0.7% for the period and year-on-year growth of 3.1%. | Economists had expected quarterly growth of 0.7% for the period and year-on-year growth of 3.1%. |
The Australian dollar fell to a new four-year low on the news. | The Australian dollar fell to a new four-year low on the news. |
Analysts said the gross domestic product (GDP) numbers meant the nation's economy was growing below trend, and that the decline in mining investment would be a major hurdle for the economy for up to the next two years. | Analysts said the gross domestic product (GDP) numbers meant the nation's economy was growing below trend, and that the decline in mining investment would be a major hurdle for the economy for up to the next two years. |
Behind the numbers | Behind the numbers |
"Australian GDP growth in the third quarter significantly undershot expectations, with shares and the Australian dollar weakening immediately," Sydney-based CMC Markets analyst Michael McCarthy told the BBC. | "Australian GDP growth in the third quarter significantly undershot expectations, with shares and the Australian dollar weakening immediately," Sydney-based CMC Markets analyst Michael McCarthy told the BBC. |
But he said markets may see through the weaker reading. | But he said markets may see through the weaker reading. |
"Recent leading indicators such as capital expenditure and building approvals have shown strength," Mr McCarthy said. | "Recent leading indicators such as capital expenditure and building approvals have shown strength," Mr McCarthy said. |
"Additionally, the consumer component of the national data surprised on the upside, with employment and spending picking up and the household savings ratio falling to 9.3% from persistent reports above 10%," he added. | "Additionally, the consumer component of the national data surprised on the upside, with employment and spending picking up and the household savings ratio falling to 9.3% from persistent reports above 10%," he added. |
Export and current account figures, released on Tuesday, had painted a brighter picture, raising expectations of a solid GDP reading for the quarter. | Export and current account figures, released on Tuesday, had painted a brighter picture, raising expectations of a solid GDP reading for the quarter. |
"The interesting pick out of [today's] figure is net disposable income is down 0.3%, and fixed investment is also falling," Evan Lucas, a market strategist at IG Markets in Melbourne told the BBC. | "The interesting pick out of [today's] figure is net disposable income is down 0.3%, and fixed investment is also falling," Evan Lucas, a market strategist at IG Markets in Melbourne told the BBC. |
"And with fourth quarter GDP looking even weaker on the commodities slowdown, growth in Australia looks in for a tough time," he added. | "And with fourth quarter GDP looking even weaker on the commodities slowdown, growth in Australia looks in for a tough time," he added. |
Some analysts say the growth results could put pressure on Australia's central bank to lower rates early next year. | Some analysts say the growth results could put pressure on Australia's central bank to lower rates early next year. |
The Reserve Bank of Australia maintained its record low official interest rate at its monthly meeting on Tuesday. | The Reserve Bank of Australia maintained its record low official interest rate at its monthly meeting on Tuesday. |
The bank's interest rate has been at 2.5% since August last year. | The bank's interest rate has been at 2.5% since August last year. |
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