Bloomberg quoted Treasurer Mr Wayne Swan before a government report on gross domestic product this week said that growth in Australia, the world's biggest exporter of iron ore and coal, may have slowed last quarter as commodity prices fell.
Mr Swan said that "We shouldn't be surprised to see growth moderate from its above trend pace in the H1 of the year given the impact of difficult global conditions and the sharp decline in commodity prices. A high local currency and consumers putting off purchases have also pressured parts of the economy."
According to the median estimate of 25 economists surveyed, Mr Swan gave his assessment 2 days before the nation's central bank board meets to decide monetary policy for the final time this year. GDP probably expanded 3.1% in the 3 months to September 30th from a year earlier. That's slower than an annual growth rate of about 4% in the H1 of the year.
The Bureau of Statistics is scheduled to release figures on October retail sales, the current account balance for the Q3 on December 4th, GDP data on December 5th and its monthly employment report for November the day after.
Iron ore prices plunged to a 3 year low in September, crimping export returns after waning demand from China, Australia's biggest trading partner. The Organization for Economic Cooperation and Development scaled back its 2013 growth outlook for Australia last month, moderating its forecast to 3% down from 3.7% projected in May.
Solid Foundation
Mr Swan said that "Despite the challenges, it's important to remember our economy remains resilient. The pipeline of investment along with our low unemployment, contained inflation and lower interest rates provides a rock solid foundation for our economy in the face of continuing global headwinds."
According to a report last week from the Bureau of Resources and Energy Economics, Australia's economy was galvanized during a global slowdown by a Chinese led demand for commodities. While commodity prices have retreated from all time highs, the value of committed resource projects has increased to a record of AUD 268 billion.
BHP Billiton Ltd, the world's biggest mining company, last week said that it's continuing an iron ore expansion in Australia's Pilbara region. The Melbourne based company currently has USD 22 billion projects in execution.
Two speed economy
Investment in mining and energy industries is offsetting Australia's manufacturers and retailers, which are battling headwinds of an elevated Australian dollar and restrained consumer spending.
Making it the biggest gainer among the Group of 10 tracked by Bloomberg, the currency has advanced 16.2% against the US dollar since the end of 2009.
The Reserve Bank of Australia meets December 4th to decide interest rate policy and 19 of 28 economists surveyed by Bloomberg News predict a 0.25% point reduction in the overnight cash rate target to 3%. Traders last week were pricing in a 90% chance RBA Governor Glenn Stevens and his board will lower rates.
According to minutes of the gathering released November 20th, after 5 rate cuts totaling 1.5% points from November 2011 to October, the central bank left the rate unchanged at 3.25% at its November 6th meeting while considering further easing may be appropriate in the period ahead.
