By Jason Cadden
(Australian Associated Press)
The Australian economy has recorded one of its best results in the past three-and-a-half years, but there are doubts whether that pace can be sustained.
Economic growth was 0.9 per cent in the September quarter, much better than expectations and the equal fastest rate of growth since the March 2012 quarter.
It was a significant improvement on the June quarter’s disappointing 0.3 per cent rate of growth which was weighed down by a big fall in mining export volumes.
However on an annual basis, the economy grew by just 2.5 per cent, which is below 2.75 per cent Treasury believes it could grow over the next few years.
The biggest contributors to growth were exports, which continue to be dominated by the mining sector, and consumer spending, the data from the Australian Bureau of Statistics showed on Wednesday.
But a downturn in private business investment, largely driven by the weaker mining sector, proved a drag on the economy.
JP Morgan economist Tom Kennedy said mining exports remain the key driver for the economy.
“All of Australia’s eggs are in the net trade basket,” he said.
“With demand for Australian iron ore and liquefied natural gas will likely to support net trade, and real GDP growth, for the next few years.”
Mr Kennedy added it was inevitable there would be a bounce following a series of weather-related port closures in the June quarter.
“As such, the magnitude of today’s contribution is unlikely to be repeated in upcoming releases,” he said.
Reserve Bank governor Glenn Stevens warned that the significance of the pick up in growth during the September quarter should not be overplayed.
“The economy is growing and I think that the outlook for continued moderate growth, you would still say that’s the outlook based on this incremental bit of additional information,” he told a business breakfast in Perth.
CommSec economist Savanth Sebastian said the good September result will help boost consumer and business confidence.
“Despite some perceptions to the contrary, the Australian economy is doing ok,” he said.
“A further lift in confidence and the translation through to consumer spending will be keys in driving growth over the coming year.”
Mr Sebastian said the main disappointment in the national accounts was that business investment remains a drag on economic growth, which was widely expected.
“Corporate Australia continues to hold back from significant investment and as such the growth outcomes over the next year will be patchy,” he said.