The story below is from the Wall St Journal, where it got more coverage than it did in the local papers, where it was barely mentioned
Australia's economy grew in the first quarter of 2009, defying a global slowdown to become one of the few developed nations to have side-stepped a technical recession. Australia's economic slowdown so far appears mild compared with other industrialized nations, but any jubilation is set to be brief as the first-quarter growth hinged almost entirely on a positive shift in the country's trade accounts. [Local reports said retail spending was also healthy]
The trade position offset a big slump in business investment and profits, but an expected deterioration in the trade picture is set to weigh heavily on the economy through 2009. Prime Minister Kevin Rudd welcomed the strong data, but warned the economy "is not out of the woods" yet and economic contraction in coming quarters can't be ruled out. "This is the worst global recession in three quarters of a century," Mr. Rudd said. "We will face higher unemployment in the Australian economy and we're not guaranteed we won't see negative growth in the future."
The average measure of gross domestic product rose 0.4% in the first quarter of 2009 from the fourth quarter of 2008 and rose 0.4% from a year earlier, the Australian Bureau of Statistics said Wednesday. Economists had expected GDP to rise 0.1% on a quarterly basis and to be down 0.1% from a year earlier. The Australian economy contracted 0.6% in the fourth quarter from the third quarter, which was revised from the originally reported 0.5% contraction.
Few watchers of the commodity-rich economy dispute that a sharp rise in unemployment is likely in 2009 and 2010 as major economies find their feet only slowly. ANZ Bank senior economist Riki Polygenis said the result means Australia may avoid entirely a technical recession -- defined as two consecutive quarters of contraction in GDP -- but there won't be any sudden resurgence in growth either. Australia's business sector is clearly suffering, and the trade boost that saved the day in the first quarter "won't be repeated," she said.
Amid evidence that China, Australia's largest trading partner, is starting to respond to stimulus, the economy is expected to continue performing better than most.
Australia still faces a hefty fall in its terms of trade in the second quarter as sharply lower prices for exported coal and iron ore wash into the national accounts, likely snuffing out any trade bonus and further damping profits and plans for investment.
A strong Australian dollar, which rallied to a fresh eight-month high of 82.46 U.S. cents after the GDP data Wednesday, is also likely to squeeze exports, keeping a lid on growth in the year ahead.
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