Australia grows at fastest rate since 2008

CANBERRA - Associated Press

Australia’s economy rocketed to 4.3 percent growth for the year through March, its fastest expansion since the global financial crisis as Chinese demand for iron ore and other commodities masked difficulties outside the mining industry.

The Australian Bureau of Statistics said yesterday that the economy grew 1.3 percent in the January-March quarter from the previous quarter, which was double what economists had expected.
A major driver was a 19.7 percent surge in engineering construction, mainly in mining. Planned investment in the resources sector reached 500 billion Australian dollars ($500 billion).

Increased spending by households also made a significant contribution to growth. But manufacturing continued to contract as the mining boom drives up the Australian dollar, making the country’s manufactured exports less competitive.

The January-March growth figures predate the latest deterioration in the Europeans debt crisis but could still make Australia’s central bank less willing to cut interest rates aggressively. The central bank on Tuesday cut its benchmark rate for a second consecutive month, to 3.5 percent, as Europe’s economy weakens and growth in China moderates.

Treasurer Wayne Swan said the strong growth was achieved despite a cyclone disrupting iron ore exports from Western Australia state and some sectors outside the mining industry struggling against a high Australian dollar.

Mineral-rich Western Australia’s economy grew by 13.6 percent for the year. “There have been headwinds as well, which is also why this is such a remarkable result,” Swan told reporters.