'Remarkable' Australian economy steams ahead

Australia Wednesday hailed as "remarkable" the 1.3 percent growth in its mining-driven economy in the first three months of 2012, as consumer spending rallied and business investment boomed. The Australian Bureau of Statistics (ABS) said the quarter-on-quarter numbers, compared with an upwardly-revised 0.6 percent for the final quarter of 2012, took annual growth to 4.3 percent. Both figures overshot forecasts of 0.7 percent and 3.4 percent respectively in a performance driven by rallying consumer spending and business investment which offset gloom in exports. Treasurer Wayne Swan described the data as "stunning" proof of Australia's world-beating economic strength, with annual growth at its fastest pace since before the global financial crisis more than four years ago. "Today's national accounts paint an extraordinary picture of exceptional growth in the March quarter... putting our economy in a league of its own, despite ongoing global turbulence," Swan said. "This is a remarkable outcome and reaffirms Australia's position as one of the strongest economies in the world, with the Australian economy growing faster than every single major advanced economy in the March quarter." The central bank has slashed interest rates by 75 basis points to 3.50 percent since the last growth reading in a bid to stimulate the sluggish non-mining part of the economy which has slowed on jitters over European debt. Business investment was bolstered by "exceptional" growth in engineering construction linked to the nation's unprecedented resources boom, with 20 percent growth in the quarter and more than 50 percent in the past year. Swan said there was a record pipeline of investment, with firms expecting to spend Aus$173 billion (US$170 billion) in the 12 months to June 2013 -- an increase of 23.5 percent from the same period last year. The total planned pipeline of resources investment had now reached "half a trillion dollars, with more than half of these projects at an advanced stage", he added. "While fragile global conditions are clearly weighing on confidence, trade and financial markets, today's report is a resounding endorsement of the strength and resilience of the Australian economy," Swan said. The Australian dollar jumped half a US cent on the news, hitting 98.28 US cents from an earlier 97.76 US cents. Mining continued to underpin growth in the resources-rich nation, increasing 2.3 percent in the quarter and contributing 0.2 percent to gross domestic product, according to the ABS. Exports fell 1.3 percent in the quarter as cyclones hit iron ore exports from the west coast, global economic conditions softened and the high Australian dollar impacted trade-exposed industries. The terms of trade -- the value of exports versus imports -- slumped 4.3 percent in the quarter as commodity prices eased, but Swan said they "remain close to record highs" and would likely stay there due to strong Asian demand. Canberra expects growth of 3.25 percent in 2012-13 and 3.0 percent each of the following three years, while the Reserve Bank of Australia has tipped growth of between 2.5 and 3.5 percent.