Annual Growth Remains Above Trend

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September 4th, 2012

THE economy has pulled back from the stunning growth rate seen at the start of the year but is still travelling above its long-term trend.

The national accounts report released on Wednesday showed the economy grew by 0.6 per cent in the June quarter.

This was slightly slower than the rate economists had expected and well below the pace recorded in the March quarter when the economy expanded by 1.4 per cent, revised up from 1.3 per cent.

However, with a seasonally adjusted annual growth rate of 3.7 per cent, the economy grew comfortably in the second quarter and above its long-term trend of 3.25 per cent.

The annual outcome was in line with the Reserve Bank of Australia's (RBA) forecast announced in August.

The main contributors to growth in the June quarter were household consumption, general government expenditure and net exports - exports minus imports - which each added 0.3 percentage points to gross domestic product (GDP).

The central bank cited close-to-trend growth as a key factor for keeping the official cash rate unchanged for a third straight month at its board meeting on Tuesday, as well as an inflation rate consistent with its two to three per cent target.

But the RBA also noted that the international outlook was more subdued than it was a few months ago.