Australia’s Economy Tops GDP Expectation with 3.1% Increase
Holding a solid growth of 1%, Australia’s economy exceeded expectations with a 3.1% annual increase in GDP.
According to the Australian Bureau of Statistics (ABS), commodities exports were the important factors of economy’s growth in March quarter.
ABS Chief Economist Bruce Hockman said that the growth in exports accounted for half growth in GDP.
“[It] reflected strength in exports of mining commodities,” Hockman added.
The increase in iron ore, coal and, LNG production impacted a 2.9% increase in the output of mining sector.
This was recorded as the strongest increase in corporate profits over the past years.
The increased corporate profits urged business to upgrade their machinery and equipment investments.
The government consumption went to a 1.6% increase and 5.1 % over the past few years which boost GDP.
However, the public spending made a slight drawback from very high levels.
In the first quarter, expenditures on essential goods and services brought a surge of 0.3% in household consumption.
The 2.9% increase in household consumption for the past few years is not a competent measure as per economists.
Sarah Hunter, head of macroeconomics at BIS Oxford Economics, said that wages rises are still tracking inflation.
“And house price falls reducing households’ net worth we expect spending momentum to remain subdued through the rest of this year,” she added.
The household savings ratio fell further to 2.1 %, which is a 10-year low despite weakness in spending growth.
Economists warned that March quarter is the peak of growth with constant weakness in household consumption.
While, Paul Dales of Capital Economics said, “we suspect that may be as good as it gets, especially if the royal commission leads to slower credit growth.”
Further, Tom Kennedy of J.P. Morgan believes that key drivers of the Australian strong-start economy with the household consumption will be fleeting.
“Today’s result is strong, though does not change our view that Australia’s long-run growth prospects remain challenged and less upbeat, with household consumption to remain hamstrung by benign wages growth and an already low saving rate,” he said.
Abu Dhabi launches economy plans on a stimulus program
Abu Dhabi sets to launch $13.6 billion expenditure and allowing companies, which are free zone-based, to move into government tenders. This is along with oil-rich emirate’s plans of stimulating the economy.
Crown Prince Mohammed Bin Zayed Al Nahyan said that the government will strategize on supporting new industries. This is also to encourage tourism and to effectively integrate them to do business.
The stock index of Abu Dhabi went to an increase as much as 1.1% and 0.8% surge on Wednesday.
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