SYDNEY (Reuters) – Australia’s economy expanded at a much faster pace than expected in the last quarter of last year and there are all signs that 2021 has started on a strong foundation also helped by a major stimulus money and fiscal.
The economy accelerated 3.1% in the three months to December, data from the Australian Bureau of Statistics (ABS) on Wednesday, exceeded forecasts for a 2.5% rise and follows a revised 3.4% gain in the third quarter .
Despite the best ever growing seasons, annual yields were still shaking up 1.1%, underscoring the temptation devastated by the pandemic of coronavirus and suggesting the need for remains on policy support for the economy A $ 2 trillion ($ 1.57 trillion).
The Australian dollar rose around 10 pips to a day high of $ 0.7836 after the data while lower futures with the three-year contract meant a yield of around 0.3% compared to the official currency level of 0.1%.
“The ‘V-shaped’ nature of the recovery is ubiquitous – economic growth, labor market, retail spending and the housing market,” said Craig James, Sydney-based chief economist at CommSec.
James expects the economy to return 4.2% in 2021.
Data on credit or debit card charges with major banks as well as official figures on retail sales, employment and construction activity mark a strong start this year.
Marcel Thieliant, an economist at Capital Economics, expects GDP growth of 4.5% in 2021, “which means that allowing the decline in net migration due to the closure of the border, will not the economy suffers a lasting result as a result of the pandemic. “
LAND NEEDS SUPPORT
The Australian economy has outperformed its richest peers in the world thanks to a very low community distribution of COVID-19 coupled with large and timely fiscal and monetary stimuli.
Its economic output fell 2.5% in 2020, far less than a 10% fall in the United Kingdom, a fall of 9% in Italy, 5% in Canada and more than 3% in the United States.
“Our economic recovery plan is working, and today’s national accounts are a testament to that,” Treasurer Josh Frydenberg said in a news conference. “The work is not done,” he said.
“There are challenges ahead. But you wouldn’t want to be in any other country but Australia as we start 2021. ”
To help ease the economic shock of the pandemic closures, the Reserve Bank of Australia (RBA) broke interest rates three times last year to a low of 0.1% and launched an unprecedented quantitative easing program. soft. The government announced a wage subsidy scheme to keep people in jobs while banks delayed payments on home loans and cut loan rates to help boost credit growth.
On Tuesday, the RBA pledged to keep its three-year yield at 0.1% until it meets its employment and inflation targets, which policymakers don’t expect until 2024 at the earliest.
Indeed, Wednesday’s data showed that domestic inflation was not much driven by the economy with the largest price increases coming from commodity exports.
The RBA has reiterated that the unemployment rate must now fall to around 4% from over 6% to help drive wage growth above 3% and for inflation to recover. to its 2-3% target band.
“There is still a great need for incentives and support,” said James CommSec. “Additional capacity will remain in the labor market for a few more years, keeping cash at anchor at 0.1%.”
($ 1 = 1.2780 Australian dollars)
Reciting with Swati Pandey; Edited by Sam Holmes