TEPID AUSSIE GROWTH
But expansion matches Netherlands record of 103 quarters without recession
AUSTRALIA’S economy squeezed out just enough growth last quarter to match the Netherlands’ record of 103 quarters without recession, but its stamina is in doubt as households struggle with paltry wage rises and punishing debt.
Government data out yesterday showed gross domestic product (GDP) rose a pedestrian 0.3 per cent in the first quarter, a pullback from the previous quarter’s rapid 1.1 per cent.
Yet that growth allayed fears of an outright contraction and helped lift the local dollar a third of a US cent to a one-month high of US$0.7542.
The result should be a relief for the Reserve Bank of Australia (RBA), which on Tuesday conceded the March quarter would likely disappoint.
But the central bank expressed confidence growth would pick up over the next couple of years to above three per cent, and held interest rates at a record low 1.5 per cent, where they have been since last August.
So far, investors seemed almost convinced the RBA was done with its five-year easing campaign.
Australia has not seen a recession since 1991 and growth regularly outpaced its peers in recent years. But that changed in the March quarter when annual growth braked to 1.7 per cent, below the two per cent achieved by the United States and Britain.
Treasurer Scott Morrison blamed bad weather for much of the slowdown and argued things could only get better as the year progressed. Reuters