Sydney: Australia’s economy expanded a steady 0.6 per cent in April-June from the previous quarter, data the ruling Labor Party seized upon Wednesday as proof of its credentials just days ahead of elections.
The figure was a slight improvement on the 0.5 per cent in the first three months of 2013 and in line with forecasts of 0.6 per cent, while the on-year 2.6 per cent rate was ahead of market expectations of 2.5 per cent.
The Australian Bureau of Statistics (ABS) data thrust economic management back into the election debate as the commodities-powered economy undergoes a painful transition away from mining as a key driver of growth.
Prime Minister Kevin Rudd said the figures, which are well below long-term averages of about 3.25 per cent, showed Australia’s resilience despite global difficulties and the unwinding of its decade-long Asia mining boom.
“We’ve grown 15 per cent over the last five or six years, I draw your attention to the fact that the British economy has shrunk three per cent over the last six years,” Rudd told reporters as he heads into Saturday’s national vote.
“The economic credentials of this nation, run by this government over this period of time, are strong. We now have had in Australia, as a result of strong economic management, 22 years of continued positive growth.”
Australia was one of the only advanced economies to dodge recession during the global financial crisis, earning Rudd’s government plaudits, and he has emphasised Labor’s record as he seeks a third term in office for the centre-left party.
The conservative opposition — which opinion polls suggest will win — have also focused on the economy, pointing to the current slowdown as evidence Labor has over-spent and saying more prudent policies are needed.
The Tony Abbott-led Liberal-National coalition plans to rescind corporate pollution and mining profit taxes unpopular with industry and slash public spending, though they are yet to release the full costings and details of their policies.
Rudd said the latest figures showed the importance of government spending as Australia confronts an uncertain transition away from its reliance on mining to other drivers of growth.
Public investment contributed as much to June quarter gross domestic product as consumer spending, which was buoyed by cuts in the official interest rate to a record low 2.5 per cent, Rudd said.
“Public investment still, in these difficult global economic circumstances, is a fundamental part of keeping the Australian economy strong and in positive growth territory,” he said.
“Pulling the plug on public investment prematurely by massive cuts places continued growth at risk.”
Abbott dismissed Rudd’s claims that his approach risked plunging Australia into recession, noting that the last time the country’s economy hit hard times was under a previous Labor government, repeating his vows to cut tax.
Analysts said taxes had little bearing on Australia’s subdued economic performance, pointing instead to China’s marked slowdown, with IMF forecasts two percent lower than they were two years ago.
“In our view, changes to tax policy will not be able to prevent mining investment from soon becoming a drag on growth,” said Daniel Martin from Capital Economics.
“We expect growth to slow further over the coming quarters as the economy struggles to cope with cooling mining investment.”
The Australian dollar bounced to 90.87 US cents from 90.50 cents prior to the release of Wednesday’s data.
The ABS said the mining, financial and healthcare sectors had been the biggest contributors to Australia’s gross domestic product over the past 12 months.
Exports remained muted, with the terms of trade — a measure of export prices versus import prices — up just 0.1 per cent in the quarter, compared with 3.1 per cent in the first three months of 2013.
Over the past 12 months the ABS said the terms of trade had fallen 4.9 per cent, reflecting drops in commodity prices as Asia — particularly key trading partner China — slows and the mining investment boom comes to an end.