Australia surprised the market yesterday by announcing that quarterly GDP edged up 0.4 percent, defying widespread expectations of a recession thanks largely to a leap in exports.
Most analysts expected Australia to slide into its first recession since the early 1990s, but stronger-than-expected exports figures released just a day earlier boosted the GDP figure for the March quarter, economists said.
The result, which averts a second successive quarterly contraction, helped send the Australian dollar to an eight-month high of US$0.8236, up US$0.0167 on Tuesday’s close, while the equities market was up 0.52 percent at noon.
The government has pumped more than US$41 billion into the economy since late last year in a bid to stave off recession, while the central bank has aggressively cut interest rates to spur demand.
On Tuesday, the Reserve Bank of Australia left interest rates on hold at 3 percent, saying there were signs of improvement and the full impact of its earlier cuts had not come through yet.
Savanth Sebastian, an analyst at Commonwealth Securities, said the GDP figure confirmed Australia’s position as one of the world’s strongest developed economies.
“If you look at developed nations around the world, they’re all negative and quite weak, yet here we are with an actual expansion,” he told Sky News. “It’s a great result for the Australian economy.”
Meanwhile, a jump in US pending home sales added to evidence the world economy, while not rebounding, has come through the worst of the slump.
The National Association of Realtors’ index for pending sales of previously owned homes on Tuesday posted an increase for the third straight month in April.
The latest data showed that April pending home sales spiked 6.7 percent month-on-month from 3.2 percent in March and above the 0.5 percent increase that was expected by most analysts.
“On the face of it this is very good news, though the relationship between the pending sales index and actual sales has been much less robust since the Lehman failure,” said Ian Shepherdson, chief US economist for High Frequency Economics.
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