Australian Economy Grows Nearly 10%

Second quarter Australian growth surprised on the upside, with the volume measure growing 1.2% (4.9% at an annualized rate) compared to the previous quarter and 3.3% compared to a year earlier.

The results were even more impressive if you consider the massive terms of trade gain and a drop in deficit in net factor income from abroad, as real net national disposable income rose as much as 5.1% (22% at an annualized rate) compared to the previous quarter and 9.5% compared to a year earlier.

The swing from a deficit to a surplus in trade as well as the decline in net factor income deficit also helped dramatically reduce the current account deficit.

The main factor driving the boom is the successful mining industry. As long as it booms, the Australian economy will also boom.

The mining industry (and therefore also the Australian economy) however faces two threats. One is the short term threat that the weakening U.S. economy could reduce growth in Asia, something which would reduce demand for its products. The other is the medium term threat that a Labor Party government supported by the Greens is going to implement environmentalist policies which would inhibit its growth.