On Wednesday, Australia’s latest GDP reports for the first quarter just surpassed analysts’ estimates of 1.5, by presenting a result of 1.7% year on year progress which strengthened the Australian dollar to its one-month high.
Additionally, Australia’s economy just added 0.3 percent in contrast to the expected 0.2 percent on quarter-on-quarter origin.
The pair up of AUD/USD soared up about 0.3 percent to close at the $0.7534 just after the GDP data was at large. Before the release, the Aussie was flat with the greenback.
The much unexpected performance of the Australian Economy was publicized just a day after the Reserve Bank of Australia (RBA) warned that any development "is expected to have slowed in the March quarter” which resulted to a dissatisfaction in the country's contemporary justification and also encouraged some experts to presume a monthly economic retrenchment.
Just as Australia circumvented possible shrinkages, experts noted that certain feebleness still persevere in the supply of the opulent country.
"Consumer spending was quite soft in the quarter, business investment is still pretty soft, we still got mining investment contracting, not a lot of uptake in non-mining investment, public demand I think is down as well. We did escape a negative number which is good news but really we're seeing broad based weakness in both business and consumer spending at the moment," chief economist David Bassanese, told reports. "(The Australian economy) probably needs a helping hand. The problem is interest rates are already very low. The Sydney and Melbourne property markets are still red hot so the banks loath to cut rates and really just sort of overly encourage these strong price gains in those property markets." Bassanese explained further.
Since August last year, The RBA has maintained benchmark rates at a low record of 1.5%. Bassanese added that any economic growth that would be reported should come be in the form of fiscal policies which are slowing unfortunately.
Various experts pointed out that the growth would very much likely enhance in the coming period, as fiscal activity was caught up by Cyclone Debbie in the year early. Nevertheless, experts think that RBA’s projection of potential growth is a little too positive than realistic.
"Overall, even if GDP growth were to rebound in the second quarter, we doubt it will be more than 2.2 percent for the year as a whole ... Subdued growth on its own won't prompt more rate cuts, but it will prevent the RBA from raising interest rates until 2019," economist Paul Dales, told reports.
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