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Mining surge helps economy bounce back

Business

The economy is expected to have bounced back, thanks to a surge in the volume of mining exports.

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Gross domestic product (GDP) is forecast to have lifted to 0.7 per cent in the September quarter, taking it to 2.3 per cent for the 12 months to September, according to an AAP survey of 13 economists.

That would be a large improvement on the 0.2 per cent in the June quarter, which was the weakest pace of growth in two years.

The Australian Bureau of Statistics is due to release the latest GDP figures on Wednesday.

Westpac senior economist Andrew Hanlan said a surge in growth was inevitable, describing the June quarter dip in exports as a “one-off”.

“Net exports are the key swing factor over the past half-year,” he said.

“For the third quarter, we expect a return to the underlying trend of sizeable positive contributions, at a forecast chunky 1.3 percentage points, whereas the second quarter was an aberration, with a sizeable subtraction of 0.6 percentage point.”

September quarter business investment figures released last week, showed the biggest quarterly fall in the official survey’s 28-year history.

Capital expenditure (capex) is now at a four-and-half-year low, mostly because of the downturn in mining and resources investment.

JP Morgan chief economist Stephen Walters said the September quarter investment figures will be a drag on September quarter economic growth.

That’s why he’s revised down his forecast for GDP growth to 0.6 per cent, from 0.8 per cent, because of the weak capex numbers.

Walters expects that the bounce in exports, and improvements in business confidence and the jobs markets to offset the decline in mining investment.

“It likely was a good quarter for households, as labour income was supported by employment gains, while inflation was minimal,” he said.

AAP

 

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