(SYDNEY) Australia’s economy grew at the slowest pace in more than a year in the fourth quarter as construction declined and bottlenecks at ports cut exports.
Gross domestic product rose 0.6 per cent from the third quarter, when it increased a revised 1.1 per cent, the Bureau of Statistics said yesterday. The gain matched the median estimate of economists. The US$1 trillion economy grew 3.9 per cent from a year earlier.
A slowdown in Australia’s economy, now in its 17th year of expansion, plus the potential fallout from the global credit crisis, gives the central bank scope to delay further interest rate increases after raising borrowing costs to a 12-year high on Tuesday to stem inflation.
Yesterday’s report showed imports surged as the lowest unemployment in more than three decades spurred spending.
‘It’s still a strong economy story,’ said David de Garis, senior markets economist at National Australia Bank. ‘The question is whether domestic demand will hold up in the face of rising interest rates.’
Rising borrowing costs, tighter lending standards, the local currency’s gain and the global slowdown are ‘significant dampening forces’ that will cool Australia’s economic expansion, central bank assistant governor Malcolm Edey said yesterday.
Australia’s stock market was cut to ‘underweight’ by Merrill Lynch & Co yesterday on concern rising interest rates will ‘hit consumer and banking stocks’. The nation’s benchmark S&P/ASX 200 Index has declined 21 per cent since its Nov 1 peak, meeting the definition of a bear market.
Exports fell 0.6 per cent in the three months through December from the previous quarter as miners were hampered by port and rail constraints, yesterday’s report shows. By contrast, government spending rose 1.7 per cent and household consumption climbed 1.6 per cent.
Source: Bloomberg (Business Times 6 Mar 08)