SYDNEY: Australia marked a world-record 26 years without a recession on Wednesday after official figures showed another quarter of economic expansion, but analysts warned of uncertain times ahead as growth slows.
The reading beat expectations, with some analysts predicting a contraction following a category four cyclone in late March as well as weak trade figures and tepid wages growth.
The economy grew 0.3 per cent in the three months to March for an annual rate of 1.7 per cent, the Australian Bureau of Statistics said.
However, while the annual rate was above forecasts — lifting the Australian dollar — it was well down from 2.4 per cent in the previous quarter.
“In the context of the past few years, it is still a fairly weak outcome,” JP Morgan economist Tom Kennedy said of the latest figures.
“The real issue is that consumption is still pretty soft even though the saving rate fell... and (capital expenditure) was flat, still not doing anything. That’s really important for the Australian economy so the domestic drivers of growth in Australia are still pretty underwhelming.”
Australia last recorded two negative quarters of economic growth in March and June 1991, before enjoying 103 quarters without a recession to equal the record run set by the Netherlands, which ended in 2008.
Economists said the resources-rich nation’s long stretch of expansion was supported by economic reforms in the 1980s and 1990s, such as the floating of the local currency, a flexible labour market, financial sector and capital markets deregulation and lower tariffs.
Australia has also benefited from China’s economic growth and hunger for natural resources, which led to an unprecedented mining investment boom and record commodity prices.
But experts have warned that growth in the next few years may not be as rosy, with the annual expansion rate of 1.7 per cent the slowest since 2009. — AFP
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