Australian Economy Probably Grew on Rudd’s Spending
Australia’s economy probably expanded in the three months through September for a third straight quarter, boosted by government spending on roads, ports and schools.
Gross domestic product gained 0.4 percent from the second quarter, when it rose 0.6 percent, according to the median estimate in a Bloomberg News survey of 17 economists. The economy probably grew 0.7 percent from a year earlier, the survey showed. The Bureau of Statistics will release the GDP report tomorrow at 11:30 a.m. in Sydney.
Australia’s economy, one of the few to skirt the global recession, grew in the third quarter and will accelerate in 2010 as consumer confidence gains and demand rises for exports such as iron ore, the central bank said today. Faster growth adds to pressure on Governor Glenn Stevens to raise borrowing costs in February after this month becoming the only policy maker in the world to increase interest rates three times this year.
“The economy is gaining good momentum into the end of the year and we continue to expect a further Reserve Bank rate adjustment in February,” said Paul Brennan, an economist at Citigroup Inc. in Sydney.
Prime Minister Kevin Rudd’s government is spending A$22 billion ($20 billion) on ports, roads, hospitals and schools, adding 0.8 percentage point to GDP in the third quarter, Citigroup estimates.
Global Rebound
Tomorrow’s report may add to global evidence of an economic rebound. Europe’s economy emerged from its worst slump in more than six decades in the third quarter, expanding 0.4 percent from the previous three months, a report showed on Dec. 3. The U.S. economy grew at a 2.8 percent annual pace.
Australia’s economy is expanding faster and generating more jobs than the government and central bank forecast at the start of the year as China’s demand for raw materials including iron ore, coal and gas prompts mining and energy companies such as BHP Billiton Ltd., Woodside Petroleum Ltd. and Santos Ltd. to increase investment and hire workers.
Treasurer Wayne Swan last month forecast GDP will rise 1.5 percent in the 12 months through June 30, 2010, compared with a May prediction of a 0.5 percent contraction. The central bank says the economy will grow 2.25 percent this fiscal year and 3.25 percent in 2010-11.
Employers added 99,500 workers between the start of September and Nov No teletrak payday loan. 30, the biggest three-month hiring surge in three years, a report showed last week. The jobless rate fell to 5.7 percent from 5.8 percent.
Gas Deal
Chevron Corp. said this month it has signed a deal with Japan’s Tokyo Electric Power Co. to supply liquefied natural gas from its Wheatstone venture in Western Australia. The project, estimated to be worth $82 billion, is forecast to generate 6,500 jobs during construction.
It is in addition to the $39 billion Chevron-led Gorgon gas venture, also in Western Australia, which is forecast to create 10,000 jobs when construction starts early next year.
Stronger economic and jobs growth will increase Governor Stevens’s scope to increase borrowing costs next year. He raised the overnight cash rate target by a quarter percentage point on Dec. 1 to 3.75 percent, adding to similar moves in October and November.
The central bank said today its decision to raise borrowing costs two weeks ago gives it more flexibility in future.
“Members agreed that, if developments unfolded as currently expected, monetary policy would need to be adjusted further over time to lessen the degree of stimulus,” officials said in minutes released today of their Dec. 1 gathering.
‘Appropriate Stance’
“That adjustment would not be intended to slow demand compared with the current forecast path, but aimed simply at keeping the stance of policy appropriate for improving economic conditions.”
Figures available at the time of the central bank’s board meeting two weeks ago “suggested a rise in GDP for the quarter,” today’s minutes added.
Investors are betting there is a 62 percent chance of a quarter-point increase in the benchmark lending rate to 4 percent at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 12:02 p.m.
The statistics bureau, which normally publishes third- quarter GDP figures in the first week of December, delayed publication of the report this year by two weeks as officials adopt new accounting standards.