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Australia set to report robust Q2 economic growth
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4 September 2012
SYDNEY (Reuters) - Australia is expected to report another quarter of brisk economic growth on Wednesday, even as a slowdown in China and sliding export prices threaten to put a brake on the country's seven-year old mining boom.
With mining companies including Fortescue Metals Group and BHP Billiton shelving ambitious expansion plans and prices for key commodities such as iron ore and coal tumbling, questions about the outlook for the resource-rich economy in the quarters ahead are mounting.
But gross domestic product (GDP) figures for the three months to June should show the A$1.4 trillion economy still grew a robust 0.7 percent. The government will release the data at 0130 GMT.
That would come after a blistering 1.3 percent increase in the first quarter and leave growth for the year at 3.6 percent, comfortably ahead of most of its rich world peers and supporting the Reserve Bank of Australia's relatively sanguine view on the economy.
'The data should highlight that the economy was on a reasonably even keel as at mid-year,' said Michael Blythe, chief economist at Commonwealth Bank.
'The broad themes should be robust private spending and strong public spending. Exports ran ahead of imports so net foreign demand added to sales growth as well.'
Household consumption looks to have been upbeat in the quarter, helped in part by rate cuts and government handouts, while public investment in hospitals, infrastructure and the like proved surprisingly strong.
Business spending was up at record levels in the quarter as resource firms pressed ahead with a raft of projects from coal to liquefied natural gas.
The latest estimates of planned spending for 2012/13 also reached new heights, at nearly 13 percent of GDP, though the risk is for some slippage given recent falls in commodity prices.
Indeed, the fall in export prices is set to take an increasing toll on national income and current price, or nominal, GDP. These essentially measure how much cash is sloshing around the economy and imply weakness in company profits, wages and tax receipts.
Equally, though, measures of inflation across the economy are also expected to be subdued in the quarter, providing plenty of scope for the Reserve Bank of Australia (RBA) to cut interest rates again if needed.
The RBA left rates steady at 3.5 percent for a third straight month on Tuesday, saying past cuts had yet to be fully felt while expressing a note of uncertainty on China's growth.
(Reporting by Wayne Cole; Editing by Kim Coghill)
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