Despite “relentless pressure” from rising interest rates and global turmoil, Australia’s economic activity, as measured by GDP growth, grew more than expected in the second quarter, according to official figures released on Wednesday.
GDP grew by 2.1% year-on-year, slightly lower than in the first quarter but higher than forecasts of 1.8%.
Compared to the first quarter, it increased by 0.4%, in line with forecasts and higher than the expansions seen in Germany, France and the United Kingdom.
Although Australia is in a position of “relative strength”, Treasurer (Minister) Jim Chalmers has warned that it remains vulnerable as China – the country’s main trading partner – struggles with its own economic downturn.
“This is a sustainable result, but we know that families are under pressure from rising cost of living and interest rates,” Mr Chalmers said when presenting the results. National Accounts of the country.
“Inflation is coming down, but very high, and we want to moderate quickly.”
Chalmers warned that economic activity will “decline significantly” in the coming year, echoing a similar message earlier this week by the country’s central bank, which raised borrowing costs 12 times from last year.
Reserve Bank of Australia (RBA) Governor Philip Lowe left the policy rate unchanged at 4.1% on Tuesday, citing “uncertainty surrounding the economic outlook”.
National Australia Bank experts said in a note, “The RBA is increasingly confident that higher rates are helping to reduce demand and improve balance in the economy – and (the) data (on the economy) provide further evidence.”
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