Australia’s economy expanded a better-than-expected 0.8 percent in the last three months of last year as the commodity-powered nation’s transition away from its reliance on the mining sector picked up speed, data showed yesterday.
The Australian Bureau of Statistics figures compare with analyst expectations of 0.7 percent growth in October to December last year, while on-year growth came in at 2.8 percent, against the 2.5 percent forecast by economists.
Australian Treasurer Joe Hockey said the statistics showed Australia “could do better,” but he was optimistic as the economy moves away from the Asia-led mining investment boom into the production and export phase.
“Today’s numbers highlight the growth challenge that the economy will face in the next couple of years as construction on a number of large mining projects comes to an end,” Hockey said. “The trends revealed today indicate we are heading in the right direction.”
The data, which helped the Australian dollar surge toward US$0.90 from Tuesday’s US$0.8931, showed exports were the main contributor to growth, but Hockey said there were also positive signs in an increase in household spending and construction of homes.
As the government tries to build growth in the non-mining sector, Hockey said the conservative administration of Australian Prime Minister Tony Abbott would work to do this by removing taxes and regulations they believe impede business.
Commonwealth Bank economist Diana Mousina said after a period of weakness, economic growth was likely to improve this year, boding well for jobs given that unemployment is at its worst point in a decade, hitting 6.0 percent in January.
However, Capital Economics’ Asia economist Daniel Martin said this year was still likely to prove a difficult year for Australia.
“Admittedly, a weaker Australian dollar, lower interest rates and a recovery in the housing market will all support growth in 2014,” he said in a note. “But with business investment set to weaken on the back of slower growth in China and consumer spending likely to be held back by high levels of household debt, we expect overall growth to slow to just 2 percent year-on-year, down from 2.4 percent in 2013.”
Separately, wealthy Chinese are likely to pour A$44 billion (US$39.4 billion) into Australian real estate over the next seven years, potentially pushing prices in one of the world’s most expensive housing markets even higher, a study said yesterday.
Investment bank Credit Suisse used data from the Australian Foreign Investment Review Board and other government agencies to estimate the amount of Chinese investment in Australian residential property at more than A$5 billion a year.
As the Asian powerhouse becomes richer, the ranks of those who could easily afford Australian real estate will swell beyond the current 1.1 million people, with implications for Australian home-buyers, it said.
“While Australia has some of the most unaffordable housing in the world, further strong Chinese demand can push prices even higher,” it said. “A generation of Australians are being priced out of the property market. Many face a lifetime of renting.”