| Australia's economy sees an upward trend |
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| World Affairs Talk | |
| Monday, 11 June 2007 | |
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Gross domestic product rose 1.6 percent in the three months ended March 31 from the fourth quarter, the Bureau of Statistics said in Sydney today. Growth was driven by consumer spending and business investment as mining companies in the world's largest exporter of iron ore and coal expanded to meet surging Asian demand. Rising demand may push the inflation rate back above the central bank's limit. The yield on the benchmark 10-year government bond rose 4 basis points to 6.12 percent. A basis point is 0.01 percentage point. The yield on the December 30-day interbank futures contract jumped 6 basis points to 6.52 percent, signaling traders expect an interest- rate increase by the end of this year. Inflation Fight - Gross domestic product, the total of all goods and services produced in Australia, rose 3.8 percent in the first quarter from a year earlier. Economists estimated 3.1 percent. Stoking consumer confidence and spending, the jobless rate was at a 32-year low in April. That spending pickup, coupled with wages growth sparked by low unemployment, may spur faster inflation, according to the Reserve Bank. Other central banks are raising rates to fight inflation. The European Central Bank in March raised its benchmark rate for a seventh time since December 2005. All 51 economists in a Bloomberg News survey expect another quarter-point increase to a six-year-high 4 percent when the bank announces a decision today. The Bank of England's benchmark rate is at a six-year high of 5.5 percent after four increases in the past year, most recently on May 10. Stoking at $844 billion, Australian economy's expansion, business investment contributed 1.2 percentage points to growth in the first quarter, today's report showed. Consumer spending contributed 0.9 percentage point. By contrast, net exports subtracted 0.2 percentage point as imports climbed. Mining and energy companies including BHP Billiton Ltd. and Rio Tinto Group have a record A$43 billion of projects under way or close to starting construction. Their investment has fueled a construction and engineering boom. Leighton Holdings Ltd., Australia's biggest construction company, plans to complete a record A$19 billion of projects within five years, and said in May its profit would rise 55 percent this financial year. The central bank forecasts underlying inflation, which strips out volatile price movements, will slow from the first-quarter rate of 2.7 percent to 2.5 percent in December, before accelerating to between 2.5 percent and 3 percent by mid-2008. The chain price index, a measure of retail prices in the economy, climbed 4.3 percent in the first quarter from a year earlier, today's report showed. Fourth-quarter economic growth was revised to 1.1 percent from 1 percent. Share & Bookmark             |
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