CANBERRA, Australia – Australia’s economy grew a slower-than-expected 0.2 per cent in the three months through June, dragged down by waning Chinese demand for resources including iron ore and coal, government figures showed Wednesday.
Economists had forecast 0.4 per cent growth in the April-June quarter. Australia’s resource-based economy grew by 0.9 per cent in the January-March quarter.
But latest Australian Bureau of Statistics data showed the slowest quarterly growth since the first quarter of 2013. Annual growth for the year through June was 2.0 per cent, well below Australia’s long-term average of 3.2 per cent.
Treasurer Joe Hockey says the latest figures show that the Australian economy is resilient because other resource-reliant economies including Canada and Brazil are now in recession.
“The transition away from a reliance on mining investment is well underway,” Hockey told reporters. “Quite clearly there is resilience in the Australian economy that other economies that have huge exposure to commodity prices could only wish for.”
The Australian economy has entered its 25th year of continuous growth, although falls in prices for iron ore and coal, which are the nation’s biggest exports, have dented growth rates in the past few years.
Government data released on Tuesday showed that Australia’s trade deficit increased by 41 per cent in the June quarter to 19 billion Australian dollars ($13.3 billion).
Hockey said a slowdown in mine construction was being offset by increases in the building and services industries.
He said 3.7 per cent annual economic growth in the June quarter in the United States, Australia’s third largest trading partner, left Australia “relatively well positioned for any unexpected weakness in China,” Australia’s largest trading partner.
The Australian dollar twice dropped below 70 U.S. cents on Wednesday, once before and once after the growth data was announced. The Australian currency had not fallen below 70 U.S. cents since 2009.
The first fall on Wednesday was as a response to weak manufacturing data from China. Australia’s benchmark interest rate has been at a record low 2 per cent since May.
The government halved its forecast price for iron ore from $96 a metric ton in 2014-15 to $48 in the current fiscal year which began on July 1. The price peaked at $185 in 2011.
This story has been corrected to show that the 2.0 per cent growth rate is for the 12 months through June not March.