0.2% Expansion in Australias Economy in the Third Quarter, Lower Than Expected
An expansion in Australia’s economy has been recorded in the third quarter but this is half short than what economists have forecast-ed. The reasons cited for the said lack were the drop in the construction and the stronger currency which contributed to the biggest drop in exports in more than seven years.
The 0.2 percent advance in the gross domestic product that was recorded from the second quarter was said to be the worst performance ever since the contraction that was observed at the end of 2008, this according to the Bureau of Statistics in Sydney. It was said that the median forecast according to the Bloom-berg survey which was participated in by 21 economists was for 0.4 percent gain from the previous period, when GDP increased to 1.1 percent.
Australia’s dollar dropped to a 10-week low against its US counterpart as stated by today’s release. This is an advance for the year which has been eroded by export competitiveness. However, the slow increase is still not enough reason to have the Reserve Bank of Australia add to the seven rate increases since October 2009 which have caused for business confidence to dip and reined in an expansion in housing.
Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney stated that until the economic recovery is able to gain traction, consumers and businesses are seen holding onto their cash. She added that the double-digit household savings ratio coupled with the weak private-sector investment made outside the mining sector are other factors which affected the said decision.
Records show that the Australian dollar dipped at 95.37 US cents which was said to be the lowest level since September 24 and fetched 95.57 US cents as of 1pm in Sydney.
RBA stated in its release yesterday that Australian banks and finance companies providing loans have increased by 0.1 percent in October as compared to that of their previous month wherein they were flat. Lending to companies however fell to 0.8 percent from that of September with 3.2 percent from the latter year.
