Australia’s economic growth in the second quarter of 2018 blew past market forecasts as population growth created additional consumer spending and increased demand for homes and infrastructure. Australia saw an annual population growth of 1.6 percent, more than double the average in the developed world. The growth was largely due to an influx of immigrants from China and India.
The country has now marked its 27th consecutive year without recession, an impressive achievement in light of the country’s constantly changing political leadership. The most recent political change was just last month when Australian Prime Minister Malcolm Turnbull as replaced by former Treasurer Scott Morrison. Morrison became the country’s fifth prime minister in eight years and though the next election is set for May 2019, the risk of early elections remains high.
Data out Wednesday from the Australian Bureau of Statistics highlighted that the Australian economy expanded 0.9 percent in the second quarter of 2018. It grew by 1.1 percent in Q1. The country’s gross domestic product (GDP) gained 3.4 percent compared to a year earlier, a growth that puts the United States’ respectable 2.9 percent GDP growth in an entirely new perspective. Forecasts for Australian GDP growth were 2.8 percent growth. The report reflected Australia’s strongest economic growth in 6 years.
Despite its impressive showing in Wednesday’s data, Australia still faces significant economic challenges ahead including a drought along the country’s eastern farm belt, falling home prices and a spike in mortgage rates. Analysts are also still questioning how the U.S.-Sino trade wa may impact Australia’s economy as China current accepts approximately one-third of Australia’s exports.
The Australian dollar rose on the news, trading 0.18 percent higher against the U.S. dollar as of 1:08 p.m. HK/SIN on Wednesday, to 0.7187. The Australian dollar had lately been hovering near its weakest levels since mid-2016.