Growth in Australia, the world’s biggest exporter of iron ore and coal, may have slowed last quarter as commodity prices fell, Treasurer Wayne Swan said before a government report on gross domestic product this week.
“We shouldn’t be surprised to see growth moderate from its above-trend pace in the first half of the year given the impact of difficult global conditions and the sharp decline in commodity prices,” Swan said yesterday in his weekly economic note. A high local currency and consumers putting off purchases have also pressured parts of the economy, he said.
Swan gave his assessment two days before the nation’s central bank board meets to decide monetary policy for the final time this year. GDP probably expanded 3.1 percent in the three months to Sept. 30 from a year earlier, according to the median estimate of 25 economists surveyed by Bloomberg News. That’s slower than an annual growth rate of about 4 percent in the first half of the year.
The Bureau of Statistics is scheduled to release figures on October retail sales today, the current-account balance for the third quarter on Dec. 4, GDP data on Dec. 5 and its monthly employment report for November the day after.
Iron ore prices plunged to a three-year low in September, crimping export returns after waning demand from China, Australia’s biggest trading partner. The Organization for Economic Cooperation and Development scaled back its 2013 growth outlook for Australia last month, moderating its forecast to 3 percent, down from 3.7 percent projected in May.
“Despite the challenges, it’s important to remember our economy remains resilient,” Swan said. “The pipeline of investment -- along with our low unemployment, contained inflation and lower interest rates -- provides a rock-solid foundation for our economy in the face of continuing global headwinds.”
Australia’s economy was galvanized during a global slowdown by a Chinese-led demand for commodities. While commodity prices have retreated from all-time highs, the value of committed resource projects has increased to a record of A$268 billion ($279 billion), according to a report last week from the Bureau of Resources and Energy Economics.
BHP Billiton Ltd., the world’s biggest mining company, last week said it’s continuing an iron ore expansion in Australia’s Pilbara region. The Melbourne-based company currently has $22 billion projects in execution.
Investment in mining and energy industries is offsetting Australia’s manufacturers and retailers, which are battling headwinds of an elevated Australian dollar and restrained consumer spending.
The currency has advanced 16.2 percent against the U.S. dollar since the end of 2009, making it the biggest gainer among the Group of 10 tracked by Bloomberg.
The Reserve Bank of Australia meets Dec. 4 to decide interest-rate policy, and 19 of 28 economists surveyed by Bloomberg News predict a 0.25 percentage-point reduction in the overnight cash rate target to 3 percent. Traders last week were pricing in a 90 percent chance RBA Governor Glenn Stevens and his board will lower rates.
After five rate cuts totaling 1.5 percentage points from November 2011 to October, the central bank left the rate unchanged at 3.25 percent at its Nov. 6 meeting while considering “further easing may be appropriate in the period ahead,” according to minutes of the gathering released Nov. 20.
Private credit rose 0.1 percent in October, the weakest since June 2011, an RBA report showed Nov. 30.
Prime Minister Julia Gillard yesterday announced a plan to rein in costs of investments in electricity infrastructure, designed to result in reduced power bills by an average of A$250 per household annually.