Australian economic growth hits high despite drought

SYDNEY – Australian economic growth hit an 18-month high in the December quarter despite the impact of the worst drought in a century, economic data released yesterday showed.

The Australian Bureau of Statistics said the economy expanded by a seasonally adjusted one per cent in the three months to December, double economist forecasts and the highest growth rate since June 2005. The figure brought Australian growth for calendar 2006 to 2,8 per cent, short of the 3,25 per cent averaged over 16 years of continuous economic expansion.Despite the unexpectedly strong figures, the Reserve Bank of Australia (RBA) on Tuesday left interest rates on hold at 6,25 per cent, saying economic growth would remain steady in coming months but was likely to slow in the longer term.”The RBA has been pointing (out) for some time now that we should not expect the economy to grow as quickly as it did a few years ago, when there was a lot of surplus labour and capital to be re-employed,” RBA assistant governor Malcolm Edey said.Treasurer Peter Costello meanwhile said drought had shaved an estimated 0,75 percentage points from annual economic growth and its impact was expected to worsen.”Today’s national accounts show an economy which is growing strongly but is suffering very severe effects of drought,” Costello told reporters.”(They) show production in the agricultural sector fell another 11 per cent in the December quarter, that’s 22,8 (per cent) lower than a year ago.Nampa-AFPThe figure brought Australian growth for calendar 2006 to 2,8 per cent, short of the 3,25 per cent averaged over 16 years of continuous economic expansion.Despite the unexpectedly strong figures, the Reserve Bank of Australia (RBA) on Tuesday left interest rates on hold at 6,25 per cent, saying economic growth would remain steady in coming months but was likely to slow in the longer term.”The RBA has been pointing (out) for some time now that we should not expect the economy to grow as quickly as it did a few years ago, when there was a lot of surplus labour and capital to be re-employed,” RBA assistant governor Malcolm Edey said.Treasurer Peter Costello meanwhile said drought had shaved an estimated 0,75 percentage points from annual economic growth and its impact was expected to worsen.”Today’s national accounts show an economy which is growing strongly but is suffering very severe effects of drought,” Costello told reporters.”(They) show production in the agricultural sector fell another 11 per cent in the December quarter, that’s 22,8 (per cent) lower than a year ago.Nampa-AFP