Australia economy slows as spending falls

CANBERRA: Australia’s economy contracted for just the fourth quarter in 25 years, official data showed on Wednesday, slowing the annual growth rate to 1.8 per cent amid weaker government and consumer spending on top of softer trade figures.

The Australian Bureau of Statistics reported a 0.5 per cent contraction for the September quarter.

It was the weakest figure in eight years — despite the recent upswing in commodity prices — and underlined the challenges facing a country in transition from a mining investment boom.

“The contraction in real GDP (gross domestic product) recorded in the September quarter is not just a reminder, not just a wake-up call or a warning about being complacent when it comes to economic growth,” Treasurer Scott Morrison told reporters in Canberra. “It is a demand to support economic policies that drive the investment needed... to survive in a tough and competitive environment.”

The latest figures — at the lower end of forecasts — came after a stellar secondquarter report that saw the economy expand by a revised 0.6 per cent for 3.1 per cent year-on-year, to mark a quarter of a century that Australia has avoided recession. The Australian dollar fell about half a US cent to 74.25 cents. “It was even weaker-than-expected, and consumer (spending) was a big disappointment,” JP Morgan economist Ben Jarman said.

“We are of the view that the RBA (Reserve Bank of Australia) is going to have to ease to keep growth at a satisfactory level.” — AFP