Australian GDP grows 0.6pc in third quarter, falling short of forecasts
Mining investment expected to drop from about 8pc of GDP to around 3pc
Australia's mining-powered economy expanded a modest 0.6 per cent in the third quarter of the year and 2.3 per cent year on year, showing a transitioning economy "stuck in second gear", the government said yesterday.
The Australian Bureau of Statistics figures came in short of analyst forecasts of 0.8 per cent growth for the quarter and 2.6 per cent year on year, underscoring the challenges for the commodity-rich nation as it is forced to move away from a decade of dependence on mining.
"The fact is the economy is stuck in second gear," Treasurer Joe Hockey said. "Today's numbers are a reminder of the tough trading conditions in the economy, particularly outside of the mining sector."
Hockey said the disappointing data, which resulted in the Australian dollar falling almost a full US cent from 91.35 US cents to as low as 90.48 cents yesterday, reflected a slowdown in the resources sector.
"The fact is the mining companies are not importing new capital, and that clearly illustrates that we have some challenges ahead as mining investment drops from around 8 per cent of GDP to somewhere around 3 per cent over the next few years," he said. "That is going to create a growth hole in the economy."
He said the budget had "deteriorated significantly" and the previous government's pre-election growth forecasts of 2.5 per cent in 2013-14 and 3 per cent in 2014-15 would not be met.
The year-on-year growth rate of 2.3 per cent was well below long-term averages of about 3.25 percent.
Commodities continued to underpin growth, contributing 0.3 per cent to the increase in gross domestic product in the quarter, the bureau said. But Australia's terms of trade, a measure of export prices versus import prices, fell 3.3 per cent in the quarter as commodity prices plunge amid slowing demand from China and new supply flooding the market.
Investment in Australia's mining boom is widely considered to have peaked, with the central bank warning last month that there had been a "large fall" in spending in the key sector, with further declines expected "over the next few years".
Outside the mining sector Hockey said conditions remained subdued, with household spending muted.