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.

  • Fight fans sue Pacquiao over injury
    Fight fans sue Pacquiao over injury

    Two Nevada men filed a class-action lawsuit against Manny Pacquiao, seeking millions in damages because they say he fraudulently concealed a shoulder injury before his defeat to Floyd Mayweather. It is just the latest fallout from Mayweather's victory in Las Vegas on Saturday in a unanimous decision, with Pacquiao saying afterwards that the shoulder complaint hampered his performance in the welterweight world title showdown. The plaintiffs argue that by failing to go public with the injury …

  • Noy leaves for US
    Noy leaves for US

    President Aquino leaves today for the United States to begin his three-day North American trip that will culminate in a state visit to Canada. The President departs at 8 a.m. on a chartered Philippines Airlines flight to Chicago for a one-day working visit. From Chicago, the President will proceed to Canada where he and Prime Minister Stephen Harper will witness the signing of bilateral agreements on labor cooperation, development assistance and infrastructure development. Canada is home to …

  • China accuses Phl of violating South China Sea Code
    China accuses Phl of violating South China Sea Code

    China has accused the Philippines of violating a 13-year-old informal code of conduct in the South China Sea with its building work on disputed islets, firing back again after repeated criticism of China’s own construction work. China and the 10-member Association of Southeast Asian Nations (ASEAN) signed an agreement in 2002 to refrain from occupying uninhabited reefs and shoals in the sea, and from building new structures that would complicate disputes. In a statement released just before …

  • Noul to bring stormy weather to central, northern Luzon
    Noul to bring stormy weather to central, northern Luzon

    Tropical storm  Noul  (international name) will bring stormy weather to the eastern section of Central and Northern Luzon this weekend, as it slightly gained strength and moved westward toward the Philippine area of responsibility yesterday. Rene Paciente, Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) senior weather forecaster, said the eastern section of Central and Northern Luzon, including Aurora, Isabela and Cagayan, may experience rains with gusty …

  • House asked to allocate P500-M legal aid for OFWs
    House asked to allocate P500-M legal aid for OFWs

    The House of Representatives was asked yesterday to appropriate P500 million for legal assistance for distressed overseas Filipino workers (OFWs). Reprieved death convict Mary Jane Veloso mirrors the tragedy of many OFWs in search of better job opportunities abroad “who become victims of human and drug trafficking and other forms of exploitation,” according to Bill 5704 that the seven-member Makabayan bloc of lawmakers had filed. The lawmakers said Veloso’s family claims that they were not …

  • World’s best place to be a mom: Norway is tops; Phl 105th
    World’s best place to be a mom: Norway is tops; Phl 105th

    Norway ranks as the world’s best place to be a mother, well ahead of the United States, which dropped to the 33rd spot in the annual scorecard released by Save the Children on Monday. Somalia is the worst place, just below the Democratic Republic of Congo and the Central African Republic. The Philippines placed 105th out of 179 countries, but the Save the Children report, which profiled Metro Manila among other cities, said that the National Capital Region has done better than most megacities …

  • Philippines' largest telco sees costly, painful fight
    Philippines' largest telco sees costly, painful fight

    Philippine Long Distance Telephone, the country's largest telecommunications firm, said Tuesday it expects to spend nearly $1 billion in a "painful" fight to survive the consumer shift to digital from traditional phone services. The listed company said net profit for the first three months of the year was flat at 9.4 billion pesos ($211 million), and the full-year net profit would likely fall below the 34.1 billion pesos it posted last year. "It's either we pivot or we perish," PLDT chairman …

  • China says Philippines violating South China Sea code

    China has accused the Philippines of violating a 13-year-old informal code of conduct in the South China Sea with its building work on disputed islets, firing back again after repeated criticism of China's own construction work. China and the 10-member Association of South East Asian Nations (ASEAN) signed an agreement in 2002 to refrain from occupying uninhabited reefs and shoals in the sea, and from building new structures that would complicate disputes. In a statement just before midnight …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options