Australia's Economy Grows 0.6% in Fourth Quarter on Public Spending and Exports

Australia's economy has expanded 0.6 percent in the final three months of 2012 helped by higher public investments and increased exports.

The Australian Bureau of Statistics (ABS) said that the seasonally-adjusted economic growth rate for the fourth quarter was 0.6 percent, compared to a revised 0.7 percent growth in the previous quarter.For the full year, the economy grew at a rate of 3.1 percent.

Economists expected the economy to grow by 0.6 percent in the December quarter and 3 percent in 2012.

The yearly growth was the highest since 2007, when the economy grew by 3.8 percent.

"Australia has managed to achieve solid growth in the December quarter at a time when around half of all advanced economies contracted, including five major advanced economies," Treasurer Wayne Swan told the Australian Associated Press.

The economy has remained resilient despite global economic headwinds and a strong currency, while its counterparts in Europe, the US and Asia are struggling with high unemployment and a fragile recovery.

Fourth-quarter gross domestic product growth was driven by a 1.1 percent contribution from public investment and 0.6 percent contribution from net exports, according to the ABS data.

On the other hand, private investment declined 1 percent as the country's mining boom has started to cool, and changes in inventories declined by 0.4 percent.

During the quarter, the mining, manufacturing, health and finance sectors contributed about 0.1 percent to GDP growth.

"The outlook for the next two years hinges on the strength of non-mining sectors as the mining boom cools. We expect policy loosening to cushion, but not prevent, an overall slowdown," Daniel Martin, Asia economist at Capital Economics, said in a research note.

The government's latest quarterly survey of investment intentions showed that mining firms have scaled back their planned investment in 2012/13 and are expecting an outright reduction in 2013/14 as well.

In line with the expected slowdown in the mining sector, the Reserve Bank of Australia has cut interest rates by 150 basis points since November 2011 in order to stimulate non-mining sectors. On 5 March, the central bank kept interest rates at 3 percent amid subdued non-mining investment and moderate consumer spending.