Aust economy grows strongly

By NZPA

Wednesday 4th December 2002

Australia's economy grew strongly in the September quarter but the disparity between the farming and non-farm sectors has become quite stark, economists said.

The Australian Bureau of Statistics (ABS) reported gross domestic product (GDP) rose 0.9 percent, seasonally adjusted, in the quarter from an upwardly revised rise of 0.8 percent in the June quarter.

Growth in the year to September was 3.7 percent.

Economists had been expecting GDP growth around 0.8 percent in the quarter according to the most recent AAP economic indicator.

"The dichotomy between the farm sector whose output fell 12.2 percent and the non-farm sector, which grew by 1.3 percent in the quarter and 4.0 percent from a year earlier, is really starkly apparent," ANZ Bank chief economist Saul Eslake said.

The ABS published a feature article in the national accounts in which it projected, using recent ABARE forecasts, that gross agriculture product at market prices was now projected to decline in 2002/03 by 22.9 percent over the previous year.

"Beyond that I don't think there are any significant implications for the government's forecasts released last week or for the financial markets in the budget arithmetic," Mr Eslake said.

He said he had suspected there would be upward revisions to the June quarter GDP.

"In the composition, private consumer spending was a little weaker than expected, spending on services must have been somewhat weak and business investment was more or less as expected and it was surprising to see a decline in public investment of about 2.0 percent adjusted."

Mr Eslake said the measures of inflation in the accounts showed a slight increase but remain well within the Reserve Bank of Australia's target band of 2-3 percent over the cycle.

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