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Australia's economy slows as private investment weakens
[SYDNEY] Australia's economy slowed more than expected in the third quarter as an increase in exports was weighed down by falling private investment, data showed Wednesday, in another sign of the nation's rocky transition away from mining-led growth.
The economy expanded by 0.3 per cent in the three months to September, down from 0.5 per cent in the previous quarter, to take the annual rate of growth to 2.7 per cent, the Australian Bureau of Statistics said.
The new readings were well below analysts' forecasts of 0.7 per cent quarterly growth for a year-on-year rate of 3.1 per cent, and sent the Australian dollar plunging third-quarters of a cent.
The local unit fell from the day's high of 84.69 US cents to a fresh four-year low of 83.92 US cents.
"There's always two sides to a boom," JP Morgan economist Tom Kennedy told AFP. "We've had the good side of it, and now we are seeing a little bit of unwind from the investment boom.
"It looks like almost all of the surprise here is from the private capex front, which took off 0.5 (percentage points) from GDP and we were expecting a much smaller drag from that component." Net exports supported growth, expanding by a seasonally adjusted 0.8 percentage points as consumption spending rose by 0.4 percentage points. But private capital spending slipped by 0.5 percentage points and public investment eased by 0.2 percentage points.
Australia's economy is transitioning towards non-resources driven growth, supported by the Reserve Bank's decision to keep interest rates at a record low of 2.5 per cent amid an expected sharp fall-off in mining investment next year.
The mining investment boom has helped keep the economy out of recession for more than two decades, but as business spending declines, growth has slipped below trend while the unemployment rate has edged up to a decade high of more than 6.0 per cent.
Sharp falls in commodity prices have also hit the economy, with the data showing a 3.5 per cent decline in the terms of trade and real gross domestic income falling by 0.4 per cent.