Australian growth slumps after floods, cyclone
2011-06-01 12:04:52
Australia's economy suffered its biggest quarterly growth slump in 20 years in the first three months of 2011, data showed Wednesday, shrinking 1.2 per cent on-quarter after wild weather rocked mining and farms.
The Australian Bureau of Statistics said gross domestic product witnessed its largest quarterly fall since the March quarter of 1991, when the nation was last in the grip of recession, due to the weather's impact on mining exports.
"Flooding which began in late December 2010 combined with cyclones in both Queensland and Western Australia have had a significant impact on the March quarter activity,' the ABS said.
The figures, which also showed a 1.0 per cent increase in growth from a year earlier, came in ahead of market expectations, which had tipped a 1.4 per cent fall in the quarter and on-year growth of 0.7 per cent.
Net exports detracted 2.4 percentage points from growth, which Treasurer Wayne Swan described as the single largest hit to exports since records began.
Rallying commodity prices helped stave off more dire outcomes, driving the terms of trade 5.8 per cent higher than the previous quarter and boosting gross national income by 0.3 per cent.
It is the first contraction in Australia's growth since the depths of the global financial crisis, when GDP fell 0.9 percent in the fourth quarter of 2008 before rebounding on strong mining exports to Asia, dodging recession.
The Australian dollar surged to US$1.0722 from $1.0674 after the data was released.
Swan said the result was "unsurprising" in light of the unprecedented natural disasters.
The floods and cyclones in both northern and western Australia had cost $12 billion in lost production, $6.7 billion of which Swan said was in the March quarter.
But the treasurer said calamities were just a blip in Australia's broadly resilient growth, with the nation "just at the beginning of a very very strong pipeline of investments", mostly in the key resources sector.
"Despite the magnitude of the disasters that we've seen in the March quarter they have not altered the strong underlying fundamentals of the Australian economy," he said.
"We should not let the adversity obscure the strong fundamentals that we have in our economy and the strong prospects we have for the future."