Australia’s economy accelerates in 2nd-qtr

Australia’s economy accelerates in 2nd-qtr on consumer spending; currency gains

Sept. 2 (BusinessWire) - Australia’s economy accelerated in the second quarter, surprising economists, as lower interest rates and fiscal stimulus stoked consumer spending. The Australian dollar gained against the greenback and the kiwi dollar.

Gross domestic product rose 0.6% in the three months to June 30, quickening from a 0.4% expansion in the first quarter, according to the Australian Bureau of Statistics. Growth was forecast to slow to 0.2%, according to a Reuters survey.

The economy of New Zealand’s biggest export market has managed to avoid recession, helped by ongoing demand in China for the nation’s raw materials, some A$22 billion in government stimulus measures and resilient consumers. Reserve Bank Governor Glenn Stevens yesterday kept the cash rate at 3%, saying economic conditions have been “stronger than expected.”

Before today, the RBA was predicting GDP would rise 0.5% this year. It sees GDP growing 2.25% in 2010.

“The fact that Australia avoided a negative number is a major plus,” said economists at Westpac. “Despite the upside surprise from headline GDP it does not strengthen the case for a more urgent interest rate increase.”

The Australian dollar climbed as high as 83.16 U.S. cents and was recently at 82.94 cents, from 82.70 cents immediately before the report. The kiwi dollar fell to 81.30 Australian cents from 81.55 cents.

Consumer spending advanced 0.8 percent in the quarter, adding 0.5 percentage points to GDP, according to the government statistician. Exports rose 1%, contributing 0.2 percentage points to GDP.

(BusinessWire)

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