CANBERRA: The economy stuttered during the three months to the end of June, undermined by reduced mining and construction activity coupled with a decline in exports.
Wednesday’s national accounts showed the economy grew at a feeble 0.2% in the June quarter, half the rate expected by economists. It compares with 0.9% growth in the previous three months – one of the fastest quarterly expansions in the world during that period.
Annual growth has slowed to just 2%, well below its long-term average of 3% to 3.25%. The treasurer, Joe Hockey, insisted the latest growth figures were in line with his budget forecasts and came at a time when other commodity-based countries were in recession.
“The diversity and flexibility of the modern Australian economy is continuing to get us through the recent massive falls in commodity prices,” Hockey said in Sydney on Wednesday. The treasurer cited one-off factors, including a 7% fall in mining exports because of port closures forced by bad weather, for the poor figure.
He said business confidence had picked up since the May budget with conditions outside the mining sector at their highest levels in almost five years. “I tell you what, the Australian economy is showing a deep resilience that people in Canada and elsewhere would die for,” he said. Canada overnight reported that it now officially had fallen into recession.
New Zealand had a growth rate of 0.1% in the March quarter and was facing significant headwinds, Hockey said. The treasurer noted “some degree of volatility” on global equity markets, saying Australia could not afford to be complacent.
The opposition leader, Bill Shorten, voiced his concerns about the latest economic growth figures and the impact on jobs. “Every quarter since [Tony] Abbott and his Liberals got elected two years ago, economic growth has come in below trend and this explains why we have the highest number of unemployed people in Australia in 20 years, 800,000 people,” he said in Sydney.
Before June’s figures came out, the assistant treasurer, Josh Frydenberg, sounded an optimistic note about Australia’s economic outlook in the face of a slowing global economy. He told ABC radio he believed there were some good signs in the economy but added: “There’s no doubt about it, we can’t be complacent and the economic reform agenda must continue.”
The world was slowing, particularly China, and that was affecting Australian exports of resources. But the economy was benefiting from a lower Australian dollar that would make exports cheaper, Frydenberg said. The latest figures reinforce fears the jobless rate, already at a 13-year peak of 6.3%, will remain high for while yet.
Hockey is heading off to Turkey for a G20 finance ministers meeting in Ankara. The head of the International Monetary Fund, Christine Lagarde, has said global economic growth is likely to be weaker than was expected just a few months ago, remaining at moderate levels. Asia was still expected to lead global growth, but the pace was slowing and could sag further because of recent financial market volatility, she said.
