Economic prospects look up Down Under

Australia beats recession to be best performing country in advanced world

The Australian government yesterday declared that their economy was the best performing of any in the advanced economic world.

The claim came as official statistics showed that Australian GDP grew by a seasonally adjusted 0.6 per cent during the second quarter, following growth of 0.4 per cent in the first three months of this year.

The Australian Treasurer, Wayne Swan, said: "We are the fastest growing advanced economy over the past year, the only advanced economy to have recorded positive growth over the past year. When every other major advanced economy has fallen into technical recession, we have not."

Having only endured one quarter of negative growth, a 0.5 per cent contraction in the three months to December 2008, Australia is one of the few advanced economies to escape the full rigours of the global recession. Analysts had been expecting a seasonally adjusted rise of 0.2 per cent in GDP.

Officials put the nation's comparative success down to the large fiscal and monetary stimuli administered by the authorities in Canberra. Without that, the Australian Treasury says, the economy would have contracted by 1.3 per cent over the past year, which would still have been one of the better global.

The Prime Minister, Kevin Rudd, said that had it not been for his administration's policies, Australia would be in "the deepest of recessions", while unemployment would be "going through the roof".

The last Australian budget made provision for an additional A$22bn (£11bn) of investment in infrastructure projects, including ports, inter-state roads and railways in Australia's big cities.

A further A$4.5bn has been disbursed on green projects, such as solar energy and fossil-fuel carbon capture.

Australia has also been helped over the past year by its healthy banking sector, one of the few not to suffer severe losses from the meltdown in credit markets, and the resilience of the Chinese market, a major destination for Australian exports of minerals and raw materials, though this latest quarter's trade figures were slightly weaker.

The strength of the Australian economy also suggests that her central bank may be one of the first to push interest rates higher. They have been held at a 49-year record low of 3 per cent since April.

Alan Clarke, an economist at BNP Paribas said: "Overall, this robust outcome is in keeping with upbeat survey indicators and suggests the trough was considerably better than once feared. The Reserve Bank of Australia has cautioned about the risk of a fallback in some components of growth as temporary schemes expire. Our reading is that although a rate hike as soon as next month is unlikely, the risk of a pre-Christmas hike is building."