Supposed recession-bound Australia continued to fight off for economic growth, advancing 0.6 per cent in the three months to the end of June, but admittedly was a slow roll for the resource-rich country.
Australia has been ranked as the eighth most attractive destination for business expansion in 2012, according to global accountancy network BDO in its new survey based from responses of 1,050 chief financial officers (CFOs) of medium sized firms around the world.
Weaker housing market, rising imports and fading mining boom were blamed for the economic rate slowdown, which according to analysts were lower than what they had projected.
According to the Australian Bureau of Statistics (ABS), the growth for the quarter was driven by a 0.6 per cent contribution from final consumption expenditure and a 0.3 per cent contribution from net exports.
"It was inevitable growth would decelerate after the impressive but unsustainable expansion in the first quarter," Katrina Ell, an economist at Moody's Analytics in Sydney, told Bloomberg News. "Mining investment, coupled with robust household consumption and higher government spending were behind the solid second quarter."
The latest figures pales in comparison to the revised 1.4 per cent growth over the end of March. It would actually have been lower if not for the jump in government spending, which hit 1.6 per cent over the three month frame. Government poured in investments by as much as 2.8 per cent over the quarter.
"There was a strong lift in household spending in the second quarter, helped by those government payments that were compensation for the carbon tax," Michael Workman, Commonwealth Bank of Australia senior economist, said.
"Also, there was pretty strong business investment."
Year on year, it was a growth rate of 3.7 per cent.
"The annual rate was what people were expecting," Mr Workman said, noting economic growth was still reasonably firm.
Over the next quarters, Australia's growth rate could continue to come in slower with the continued drop in the prices of commodities.
"The terms of trade numbers look like they are going to be a bit lower," Mr Workman said.
"Generally, it looks like household income growth is going to be weaker in the second half of the year and jobs growth is, basically, flat."
AMP's Shane Oliver seconded the observation.
"The surprising spurt of growth in the March quarter is now over and we are heading back into a soft patch,'' said Mr Oliver. The June quarter numbers would suggest that was a bit of an aberration and we are heading back towards a softer trend," he said, noting the year's second half will come harder going on the cooling mining boom and the continued economic uncertainty about China's growth.
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