As Europe is in financial chaos and the U.S. is following close behind, investors are looking for more stable markets during volatile economic times. One of the fastest growing markets recently has been Australia as a result of their strong mining industry and increased infrastructure investment. The Financial Times reports:
“Australia’s resource-rich economy expanded at twice the pace expected by economists in the first quarter of 2012, lifted by an unexpected increase in household spending and continued heavy investment in mining projects.
Gross domestic product advanced 1.3 per cent from the previous quarter, when it rose a revised 0.6 per cent, according to the Australian Bureau of Statistics. This was well above market expectations of a 0.6 per cent rise and, excluding the quarter that followed the 2011 flooding in Queensland, was the fastest acceleration in economic growth in five years. In annual terms, GDP growth in the year to March was 4.3 per cent.
The strong reading came a day after the Reserve Bank of Australia lowered its benchmark interest rate to 3.5 per cent — the lowest level in almost three years — because of ‘moderate domestic growth’ and a ‘weaker and more uncertain international environment’.
Wednesday’s report showed capital expenditure in the mining sector up 14 per cent in the first quarter of the year, and the main driver of a 20 per cent increase in private infrastructure investment. But it was a 1.6 per cent rise in household spending during the quarter that surprised the market.
‘Despite their negativity about a lack of wealth growth and cost of living increases, the consumer is spending money,’ said UBS economist Scott Haslem.
Treasurer Wayne Swan hailed the figures as ‘stunning’ and said they showcased the ‘rock-solid economic fundamentals’ that put Australia in a ‘league of its own’.
‘This is a remarkable outcome and reaffirms Australia’s position as one of the strongest economies in the world, with the Australian economy growing faster than every single major advanced economy in the March quarter,’ said Mr Swan.
But economists said the data, which preceded the latest bout of global economic worries, might prove to be the growth peak for Australia, and highlighted the unevenness in growth between the mining and non-mining sectors of the economy.”