CANBERRA: Australia’s economy slowed in the first three months of the year as bad weather hit exports and a deceleration in homebuilding produced the weakest annual growth since the aftermath of the global financial crisis in 2009.
New figures show gross domestic product grew 0.3 per cent quarter-on-quarter in the three months ending March 31, slowing from 1.1 per cent in the December quarter but in line with economists’ forecasts. Annual growth slowed to 1.7 per cent year-on-year from 2.4 per cent in the fourth quarter of 2016, the slowest rate since the third quarter of 2009, according to the Australian Bureau of Statistics. Scott Morrison, Australia’s treasurer, blamed bad weather for the sluggish growth rate and said the economy remained “resilient”. “Adverse weather conditions during the March quarter affected exports, particularly iron ore exports in the west,” he said on Wednesday. “Weather impacts are likely to affect the next quarter’s results also, particularly for coal in the aftermath of Tropical Cyclone Debbie.” The Australian dollar surged 0.4 per cent to at $0.7537 following the GDP statistics.
Australia’s remarkable record of almost 26 years of headline growth remains intact but the country is facing headwinds because of record low wage growth, a slowing housing market and a recent reversal in commodity prices. GDP per capita, a better measure of living standards, increased by a miserly 0.2 per cent through the year — a level Commonwealth Bank of Australia described as “sobering”. “Today’s growth outcomes have significantly undershot the RBA’s expectations and it will take a heroic effort from here for GDP growth to meet their year-end forecast,” said Kristina Clifton, CBA economist.
The Reserve Bank of Australia is forecasting that GDP growth will pick up to between 2.75 per cent and 3.75 per cent by early 2018. Australian Bureau of Statistics data show net exports detracted 0.7 percentage points from growth, a result analysts said reflected weather disruption to iron ore and coal exports. A slowdown in the property market also crimped growth, with investment in total dwellings down 4.4 per cent during the first quarter.
