Australia slows as weak exports weigh on economic growth

Sydney (AFP) – Australia’s economic expansion slowed in the last three months of 2017 despite a lift in consumer spending as net exports weighed on growth, official data showed Wednesday.

The expansion in the last three months of the year took the annual rate of growth to 2.4 percent, the Australian Bureau of Statistics said.

The figures came in slightly below analysts’ expectations and the central bank’s forecasts. Third-quarter growth was revised up from 0.6 percent to 0.7 percent.

Treasurer Scott Morrison said the figures, which saw the annual rate of growth fall from 2.7 percent from the previous quarter, reflected the resilience of Australia’s economy.

“The overall numbers have been pulled back by what’s been happening with net exports,” he told reporters in Canberra.

But beyond the headline figures, he said the data on consumption, non-mining investment, compensation of employees and profits “indicate a soundness and a strength to the domestic Australian economy”.

Household spending drove growth in the October-December quarter, increasing 1.0 percent for the period after an upwardly revised 0.5 percent growth in the previous three months.

Net exports weighed, detracting 0.4 percentage points from GDP growth.

Analysts said the data reaffirmed expectations that the Reserve Bank was unlikely to lift rates until later this year or early 2019.

“Looking ahead, the outlook for business investment is better than these figures suggest, but dwellings investment will probably continue to decline and consumption may weaken again soon,” Capital Economics’ chief Australia economist Paul Dales said in a note.

“We doubt the RBA will raise interest rates until late in 2019.”

The central bank has not moved interest rates from a record low of 1.5 percent since August 2016, to support growth in non-mining industries as the country moves away from an unprecedented boom in resources investment.

The transition has been rocky, with a tightening of monetary policy not expected in the near term amid weak wages growth and uncertainty over household spending.