Australia’s economy grew at a faster-than-expected pace in the third quarter, driven by a surge in public spending and a rebound in consumer spending.
The Australian Bureau of Statistics (ABS) reported on Wednesday that the country’s gross domestic product (GDP) expanded by 0.7% in the three months to September, following a 0.5% gain in the previous quarter.
The result was stronger than the 0.5% growth forecast by economists and marked the fastest pace of expansion since the third quarter of 2017.
The ABS attributed the strong growth to a surge in public spending, which rose by 2.2% in the quarter, driven by increased government spending on infrastructure and social services.
Consumer spending also rebounded, growing by 0.8% in the quarter after a 0.3% decline in the previous quarter. This was driven by a rise in spending on discretionary goods and services, such as holidays and entertainment.
Business investment also made a positive contribution to growth, rising by 1.4% in the quarter, although this was largely driven by a surge in investment in the mining sector.
The strong growth in the third quarter has boosted hopes that the Australian economy is finally starting to gain momentum after a period of sluggish growth.
The Reserve Bank of Australia (RBA) has been cutting interest rates in recent months to stimulate the economy, and the strong growth in the third quarter may reduce the pressure on the central bank to cut rates again.
However, the RBA is still expected to keep interest rates on hold at its next meeting in November, given the ongoing uncertainty surrounding the global economy and the impact of the bushfires on the Australian economy.
The Australian dollar rose by 0.5% against the US dollar after the GDP data was released, as investors became more optimistic about the outlook for the economy.