Wednesday, June 06, 2007

Aussie Economic Growth Accelerates

Australia's economic growth rose to 1.6% in the first quarter, which expressed the way growth is expressed in America means a 6.5% annualized growth rate. Expressed in Swedish terms, i.e. change compared to the same quarter the previous year, growth was 3.8%.

Taking into account the improvement in terms of trade, growth is actually even higher than what the above numbers suggest. On the other hand, Australia's population growth is very fast (1.5%), meaning that per capita income growth isn't as high as total growth.

The Australian Bureau of Statistics doesn't provide you with many details, so we have to wait until the Reserve Bank of Australia's publication of the numbers to make a more thorough analysis.

However, it is clearly evident that what drives the Australian economy is first and foremost the commodity boom. This is what drives the improvement in terms of trade and this is what drives the massive increase in investments. As long as it continues, Australian growth will remain strong. If and when it ends, however, the record long boom in the Australian economy will likely end too. Especially since Australia have some of the imbalances seen in America.


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