Australia’s economic growth misses estimates, rising 2.1% in the third quarter

Australia’s economic growth in the third quarter missed analysts’ expectations, but recorded its fastest expansion in nearly two years, driven by strong investment and consumer demand.

The country’s gross domestic product expanded by 2.1% year-on-year, marking its strongest expansion since the third quarter of 2023 when the economy expanded at the same rate. Data from the Australian Bureau of Statistics showed on Wednesday. The GDP exceeded economists’ expectations of growth of 2.2%.

On a quarterly basis, Australian GDP grew by 0.4% compared to a forecast of 0.7% in a Reuters poll.

“This imbalance is not a sign of a materially weaker economy,” said Harry Murphy-Crews, head of global economic research and trade at Oxford Economics, noting that excluding inventories and trade, the domestic economy rose 1.2% compared to the previous quarter – the fastest expansion in more than two years.

Echoing this view, Sunny Nguyen, head of Australian economics at Moody’s Analytics, attributed the lower-than-expected headline figure partly to companies writing down inventories “more aggressively than expected”.

“But they talk about timing and accounting more than the underlying final demand,” Nguyen added.

Domestic final demand contributed 1.1 percentage points to growth. Private investment grew at the fastest pace since March 2021, driven by business investment in machinery, equipment and major data centers across New South Wales and Victoria.

Household consumption continued to expand, led by insurance, electricity, gas, rent, health care, and food.

Meanwhile, net trade was a major drag, dragging the economy down by 0.1 percentage point, as import growth outpaced export rise in the three months to September.

Ahead of the GDP data, Reserve Bank of Australia Governor Michelle Bullock warned that the economy had likely reached the limit of its potential growth as inflation remained above the bank’s target. Bullock added that the board will act on renewed price pressures.

The country’s inflation rate accelerated in October An increase of 3.8% on an annual basismarking its fastest pace in seven months, outpacing the Reserve Bank of Australia Target range 2% and 3%.

At the monetary policy meeting last month, the central bank maintained interest rates Interest rate unchanged at 3.6%She said she was cautious about further easing, given the strengthening economy, tight labor market and persistent inflationary pressures.

Bullock said last month that the current The cycle of interest rate cuts may be coming to an endThe central bank expected inflation to remain above the target range of 2% to 3% until the second half of next year.

The Reserve Bank of Australia’s board meets next week and is widely expected to leave interest rates at 3.6%.

In the second quarter of this year, the Australian economy expanded 1.8% on an annual basisCompared to 1.3% in the previous quarter, supported by domestic spending including household and government consumption.