Business

Australia's economy expands 2.5%, led by mining

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Media captionJoseph Capurso, an economist at the Commonwealth Bank in Sydney, says growth should continue into next year

Australia's economy grew more than expected in the third quarter, driven by building and mining activity.

Gross domestic product (GDP) rose 2.5% in the three months till the end of September from the same period a year earlier, the statistical bureau said.

Analysts expected a gain of 2.1%, and the Australian dollar rose slightly on the news.

Despite the stronger growth, there are fears about coming quarters with a slowdown expected in Europe and China.

Grim outlook?

The weaker outlook is what prompted the Reserve Bank of Australia on Tuesday to cut interest rates by 25 basis points, to spur domestic demand.

It was the second rate cut in as many months.

"It seems likely to us that by the next [RBA] meeting, the outlook for global growth will be worse," said Rob Henderson, head of market economics at NAB.

"We expect the next inflation outcome, due in late January, to be another low reading."

Resource boom

Despite the concerns, some analysts say Australia's economy seems better placed to weather the global economic problems than many others.

"We see solid growth right through next year, which is diametrically opposite to what most of the developed world can look forward to," said Brian Redican from Macquarie.

Image caption The Australian dollar jumped after the release of the latest growth figures

Wednesday's data showed that compared to the April to June period growth in the quarter was at 1%. That is higher than growth rates in the US and most of Europe.

The continuing health of the resource industry is one of the main contributors, as miners expanded output to meet the needs of China and India.

Business spending added 2.1 percentage points to GDP growth. Engineering construction rose 31% in the quarter.

Household consumption grew 1.2%, the data showed, adding 0.7 percentage points to GDP.

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