Australia economy grows 3.6% annually on spending, exports

by | Sep 7, 2022 | World

Strong economic results come as inflation is running at a 21-year high of 6.1 percent.Australia’s economy picked up speed in the June quarter as consumers kept spending and energy exports boomed, offering hope activity can weather sharply higher interest rates and cost-of-living pressures.
Data from the Australian Bureau of Statistics on Wednesday showed gross domestic product (GDP) rose 0.9 percent in the second quarter, in line with forecasts and up on the first quarter’s 0.7 percent rise.
Annual growth accelerated to 3.6 percent as the lowest unemployment rate in almost five decades underpinned household incomes and spending.
Indeed, so resilient was the economy that the Reserve Bank of Australia (RBA) has had to embark on an uber-aggressive tightening campaign to try to cool activity and restrain runaway inflation.
The central bank on Tuesday raised its cash rate 50 basis points to a seven-year high of 2.35 percent, bringing the total tightening since May to an eye-watering 225 basis points.
Markets are leaning towards another half-point hike in October, and for rates to reach as high as 3.85 percent given inflation is running at a 21-year peak of 6.1 percent and likely to top 7 percent by Christmas.
Inflation was widespread in the GDP report, with its main price index jumping 6.9 percent for the year, the fastest pace since 1988/89.
Compensation of employees, a proxy for wages, boasted the biggest gain since 2010 as firms were forced to pay to attract and retain staff amid an unemployment rate of just 3. …

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