Designed by Danish architect Jørn Oberg Utzon, the Sydney Opera House lights up as the sun rises over Sydney Harbor and the skyscrapers of the city centre.
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Australia’s economic growth in the third quarter was weaker than analysts expected, but it was the fastest expansion in nearly two years, driven by strong investment and consumer demand.
Data released by the Australian Bureau of Statistics on Wednesday showed the country’s GDP rose 2.1% year-on-year, marking the strongest expansion since the third quarter of 2023, when the economy grew at the same rate. Economists had expected GDP growth to be 2.2%.
Australia’s GDP rose 0.4% from the previous quarter, compared to a Reuters poll’s forecast for a 0.7% increase.
“This failure does not indicate a significant deterioration in the economy,” said Harry Murphy-Cruise, head of economic research and global trade at Oxford Economics, noting that the domestic economy, excluding inventories and trade, rose 1.2% from the previous quarter, the fastest growth in more than two years.
Sunny Nguyen, head of Australian economics at Moody’s Analytics, echoed this view, saying the headline figure was lower than expected in part because businesses were valuing their inventories “more aggressively than expected.”
“But they say more about timing and accounting than the underlying end demand,” Nguyen added.
Domestic final demand contributed 1.1 percentage points to growth. Private investment increased at the fastest pace since March 2021, led by business investment in machinery, equipment and major data centers across New South Wales and Victoria.
Household consumption continued to expand, mainly in insurance, electricity, gas, rent, medical care, and food.
Meanwhile, net trade was a major drag as import growth outpaced export growth in the three months to September, pushing the economy down by 0.1 percentage point.
Ahead of the release of the GDP figures, Reserve Bank of Australia Governor Michelle Bullock warned that the economy was likely reaching the limits of its potential growth, with inflation still running above the central bank’s target. Block added that the board intends to address emerging pricing pressures.
The country’s inflation rate accelerated in October, rising 3.8% year-on-year, the fastest pace in seven months and above the RBA’s target range of 2% and 3%.
The central bank kept interest rates unchanged at 3.6% at last month’s monetary policy meeting, saying it was cautious about further easing given the strong economy, tight labor market and continued inflationary pressures.
rate bet
“The third quarter data confirms that economic conditions are still too hot for the RBA’s liking,” Mr Cruz said, adding that a rate cut was “off the table for some time” and that a rate hike next week “cannot be ruled out” to rein in inflation.
Following the announcement, the Australian 10-year government bond yield rose 4 basis points to 4.650. It has risen 55 basis points since mid-October.
Block said last month that the central bank expects inflation to remain above its target range of 2% to 3% through the second half of next year, suggesting the current rate-cutting cycle may be nearing an end.
The RBA is widely expected to hold interest rates at 3.6% when it meets next week.
In the second quarter of this year, the Australian economy grew by 1.8% year-on-year (compared to 1.3% in the previous quarter), supported by domestic spending, including household consumption and government consumption.
