Australia Recovers, Posts GDP Gains in June Quarter

Australia had a barrelling finish on the second quarter, thanks much on soaring economic activities fuelled by the mining sector, according to the latest report issued by the Australian Bureau of Statistics (ABS) on Wednesday.

Basing on the latest ABS data, the country's gross domestic product ( GDP ) surged ahead by 1.2 percent, which exceeded previous market expectations of 1.0 percent in the period, while year-on-year expansion was pegged at 1.4 percent, eclipsing the 0.7 percent benchmark earlier set by economists.

The figures, ABS said, departed from the 0.9 percent retreat seen in the first three months of 2011, in which the economy was largely battered by series of natural disasters and flooding that experts said stalled economy and erased the gains earlier achieved.

Federal Treasurer Wayne Swan noted that the encouraging results only highlighted recovery efforts, especially those in the export industry that were affected by the barrage of cyclones and flooding.

"Exports grew by 2.6 percent in the quarter, largely driven by the rebound in iron ore exports which have now returned to their pre-flood levels," Swan told the Agence France-Presse (AFP) as he added that resources inventories have already achieved ideal inventory levels.

He also revealed that miners realized rising net incomes of up to 15 percent in the June quarter but admitted that "flood waters are still affecting some mines which have led to a more protracted recovery."

Still hurting, Swan said, was mostly coal mining though many of its operations have resumed, with some even reaching full production capacity.

The consistently surging Australian dollar, however, chipped away 0.5 percentage points from the country's import sector and as it shot up again with the news of the GDP jump, pressures on manufacturing and other sectors remain hovering despite the overall improvements.

As earlier announced by the central bank, household spending was at best cautious but Swan noted that Australians started opening their wallets as growth on that sector was traced at about 1.0 percent.

Australia's terms of trade, which according to ABS, have been considerably growing over the past 10 years, registered expansions of 5.4 percent in the quarter and 12.9 percent year-on-year.

Amidst the generally positive indicators, analysts are embracing cautiousness as they noted underlying weaknesses in the domestic environment could not withstand the expected pressures flagged by economists due to unsettling global conditions.

The government, however, has expressed confidence that Australia is well-placed to weather the impending storms projected by experts as in the case during the onslaught of the global financial crisis, which the country had survived virtually unscathed.

"Despite renewed global uncertainties and the patchwork pressures facing some of our sectors, this result is another reminder that we have a proven track record of resilience and we confront these challenges from a position of strength," Swan asserted.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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