Australia central bank hikes 2012 growth forecast

Australia's central bank upped its annual growth forecast Friday after a strong first half, but it warned that resources investment -- a key driver of the economy -- would peak by 2014.

The Reserve Bank of Australia (RBA) said it now expected growth of 3.5 percent for 2012, instead of the 3.0 percent forecast in May, with the domestic economy powering on at above-average pace in the first six months of the year.

Australia's mining-driven economy expanded 1.3 percent in the three months to March -- a result hailed as "remarkable" by the government given the cooling in China and Europe's woes.

Even if some of the March quarter growth is revised downwards when the next growth reading is released in September, the RBA said "the data currently suggest that growth in activity may have been above trend over the first half."

A solid rebound in household spending and continued strength in resource investment were seen as the main drivers.

Looking ahead, the bank warned that the boom in mining and energy-related spending was expected to peak "sometime in 2013-14" and begin modestly subtracting from growth over 2014.

"That peak is expected to occur somewhat earlier than previously thought," the RBA said in its quarterly outlook on monetary policy.

"Some resource companies have adopted a more cautious approach to investment opportunities currently under consideration... given the more uncertain global outlook."

Treasurer Wayne Swan welcomed the upbeat remarks, saying they confirmed that "our economy is currently travelling along better than expected."

He noted that mining investment remained strong and the impact of it tapering off would be roughly offset by faster growth in resources exports made possible by the expansions to production capacity planned or underway.

The RBA's inflation outlook was little changed at 2.50 percent for the year to December, compared with 2.25 percent forecast in May, and the bank said it saw the current official interest rate of 3.50 percent as "appropriate".

On the global front, the RBA said China's growth was expected to pick up slightly in the second half of the year "as recent easings in fiscal and monetary policies start to take effect".

But Europe continued to weigh heavily on the outlook as a "significant downside risk" and conditions were "expected to remain weak in the euro area for some time".

"As a result of the trade and confidence linkages from the below-trend growth in Europe and the United States, growth may be dampened in much of Asia," the bank said.

Though possible scenarios included "the exit of one or more economies from the euro area," the RBA said its forecasts assumed ongoing volatility in sentiment and financial markets without a "severe disruption" to the region.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippines backs support for small enterprises at APEC meet

    MANILA, Philippines (AP) — The Philippines' top trade official on Saturday called for support for the integration of micro, small and medium enterprises in global trade, which he said would help reduce poverty and inequality in the Asia-Pacific region. …

  • US renews travel warning to Mindanao
    US renews travel warning to Mindanao

    The US State Department renewed its warning about the risks of travel to the Philippines, in particular to the Sulu archipelago, certain regions and cities of Mindanao and the southern Sulu Sea area. In an update on Wednesday of a travel warning it issued Nov. 20, 2014, the State Department said US citizens should continue to defer non-essential travel to the Sulu archipelago due to the high threat of kidnapping of international travelers and violence linked to insurgency and terrorism there. …

  • Phl gains support for APEC Action Agenda
    Phl gains support for APEC Action Agenda

    The Philippine initiative to put the interests of micro, small and medium enterprises (MSMEs) front and center in global and regional trade has made significant progress following the conclusion on Thursday of the 2nd APEC Senior Officials’ Meeting (SOM2) and Related Meetings in Boracay, Aklan. Called “The Boracay Action Agenda to Globalize MSMEs,” the Philippine proposal calls for a host of specific, concrete and practical interventions that APEC economies can implement to provide MSMEs wider …

  • Phl to join Bangkok meet on Rohingya crisis next week
    Phl to join Bangkok meet on Rohingya crisis next week

    The Philippines will join a 15-nation meeting in Bangkok, Thailand next week to address the migration crisis involving thousands of Rohingyas who escaped persecution in Myanmar and Bangladesh. Justice Secretary Leila de Lima bared this yesterday after meeting with United Nations High Commission for Refugees (UNHCR) representative to the Philippines Bernard Kerblat. In an interview, De Lima said the Philippine government has been invited to the meeting. …

  • Magnitude 4.2 quake jolts Sorsogon
    Magnitude 4.2 quake jolts Sorsogon

    LEGAZPI CITY—A magnitude 4.2 earthquake hit Prieto Diaz town in Sorsogon before dawn yesterday, the Philippine Institute of Volcanology and Seismology (Phivolcs) said. …

  • Drought-resistant rice breeds bared
    Drought-resistant rice breeds bared

    SCIENCE CITY OF MUÑOZ, Nueva Ecija – Amid the searing heat, the Philippine Rice Research Institute central experiment station here has identified nine rice breeds which have been proven to be drought-resistant and produce high yields in temperatures as high as 38°C based on a recent study. Thelma Padolina, lead researcher of the study titled “Screening of rice-induced mutants for heat and drought tolerance,” identified the breeding lines as the Ballatinaw lines, PSB Rc72H and Azucena lines. …

  • Phl, US assert rights, ignore China warning
    Phl, US assert rights, ignore China warning

    The United States military will continue air and sea patrols in international waters even after the Chinese navy repeatedly warned a US surveillance plane to leave the airspace over artificial islands China is creating in the disputed South China Sea. The Philippine government also declared it would continue activities in the region, calling on China to respect freedom of navigation and aviation. “Our position on the importance of letting freedom of navigation, freedom of aviation and …

  • MM shutdown eyed for quake drill; 6 schools warned
    MM shutdown eyed for quake drill; 6 schools warned

    Electricity and mobile phone services would be cut throughout Metro Manila, and all private and government offices and businesses, including shopping malls, would be closed. That would be the situation on July 16 between 3 and 8 p.m. to simulate the scenario of a 7.2 magnitude earthquake. The Philippine Institute of Volcanology and Seismology (Phivolcs) has warned that an earthquake of that magnitude could occur and kill at least 33,500 people and injure at least 113,600 others following a …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options