Growth in Australia, the world’s biggest exporter of iron ore and coal, may have slowed last quarter as commodity prices fell, Australian Treasurer Wayne Swan said before a government report on GDP this week.
“We shouldn’t be surprised to see growth moderate from its above-trend pace in the first half of the year given the impact of difficult global conditions and the sharp decline in commodity prices,” Swan said yesterday in his weekly economic note.
A high currency and consumers delaying purchases have also pressured the economy, he said.
GDP probably expanded 3.1 percent in the three months to Sept. 30 from a year earlier, according to the median estimate of 25 economists surveyed by Bloomberg News.
That is slower than an annual growth rate of about 4 percent in the first half of the year.
The Australian Bureau of Statistics is scheduled to release GDP data on Wednesday.
Iron ore prices plunged to a three-year low in September, crimping export returns after waning demand from China, Australia’s biggest trading partner.
“Despite the challenges, it’s important to remember our economy remains resilient,” Swan said.
“The pipeline of investment — along with our low unemployment, contained inflation and lower interest rates — provides a rock-solid foundation for our economy in the face of continuing global headwinds,” he said.
Australia has benefited from a Chinese-led commodity demand surge that has helped galvanize the nation’s economy during a global slowdown. While commodity prices have retreated from all-time highs, the value of committed resource projects has increased to a record A$268 billion (US$279 billion), according to a report last week from the Bureau of Resources and Energy Economics.
Investment in mining and energy industries is offsetting Australia’s manufacturers and retailers, which are battling headwinds of an elevated Australian dollar and restrained consumer spending.
The currency has advanced 16.2 percent against the US dollar since the end of 2009, making it the biggest gainer among a group of 10 tracked by Bloomberg.
The Reserve Bank of Australia meets tomorrow to decide interest rate policy, and 19 out of 28 economists surveyed by Bloomberg predicted a 0.25 percentage-point reduction in the overnight cash rate target to 3 percent.
After five rate cuts totaling 1.5 percent points from November 2011 to October, the central bank left the rate unchanged at 3.25 percent at its Nov. 6 meeting while considering “further easing may be appropriate in the period ahead,” according to minutes of the gathering.