Australian economy slows in fourth quarter

Australia's mining-driven economy grew slower than expected in the December quarter, expanding just 0.4 percent as investment stalled and export prices slumped, according to data released Wednesday.

The Australian Bureau of Statistics (ABS) said gross domestic product rose by 0.4 percent in the three months to December compared to the previous quarter, half the rate analysts had forecast.

Over the year, growth reached 2.3 percent, against expectations of 2.4 percent.

Treasurer Wayne Swan said it was a "solid" result given that "the world was facing the most dire conditions in the global economy since the height of the financial crisis" during the final months of 2011.

Australia was the only advanced economy to dodge recession during the downturn and remains enviably resilient in comparison to global peers.

"Despite our underlying strengths, we always said that global instability would impact our economy, and these headwinds have added to existing pressures from the sustained high dollar and the cautious consumer," he said.

"In the face of the acute global turmoil, it was encouraging to see that economic growth in the quarter was driven by strong growth in exports and modest growth in consumption."

Sovereign debt problems have seen the eurozone slip into mild recession, with growth of just 1.4 percent in last year, and there are fears of a slowdown in China after Premier Wen Jiabao set a growth target of 7.5 percent for 2012.

Swan warned that the global woes would "inevitably flow through to government revenues and the budget bottom line" but Canberra remained committed to returning to surplus in 2012-13.

Solid consumer spending was offset by slumps in business and dwelling investment, while Australia's terms of trade -- the value of its exports against its imports -- fell 4.7 percent.

It was the measure's first drop since September 2009, following an easing in commodity prices as global demand slowed, and gross domestic income fell 0.6 percent as a result.

Swan put the decline in investment down to "quarter to quarter volatility" driven by the massive scale of Australia's mostly mining-related projects.

"While new business investment declined by one percent in the quarter it's still up a spectacular 18.9 percent through the year," he said.

The Australian dollar dived to a six-week low of US$1.0524 on the data which was seen as increasing the chances of an interest rate cut in the near-term. It had been fetching $1.0572 immediately prior.

Stocks also fell, with the benchmark S&P/ASX 200 index ending 1.5 percent lower as the GDP data "added to increased concerns of global growth" according to IG Markets analyst Stan Shamu.

Shamu said all eyes would now be on Australia's jobs data, due out Thursday.

Analysts said the GDP figures revealed sluggishness in the non-mining economy and cast doubt on the central bank's predictions of trend growth as it held interest rates steady for a second month at 4.25 percent this week.

"The mining boom is alive and well, but it's not leading to much in the way of a spillover effect on the rest of the economy," said AMP Capital Investors economist Shane Oliver, predicting weak growth for the next six months.

"Overall, it's a pretty soft outcome. Consumer spending is just hanging in there, but there was quite pronounced weakness in investment."

Canberra expects growth of 3.25 percent for 2011-12, while the Reserve Bank of Australia slashed its GDP forecasts last month for the financial year to June 30 to 3.5 percent.

The central bank has tipped 3.0-3.5 percent growth for calendar 2012.

Source: http://news.yahoo.com/australian-economy-grows-0-4-dec-quarter-013621181.html

north dakota jobs referendum scarlett johansson glee project winner kris humphries remember the titans wale