Chamber Talk with QT Better Business columnist Brett Kitching.
Chamber Talk with QT Better Business columnist Brett Kitching.

Take the good with the bad when digesting new GDP results

UNFORTUNATELY it seems that the further we go into the year 2013, the worse the news gets from an overall economic viewpoint however, as Ipswich is somewhat insulated from the national and international economic movements, the news is not so bad on the home front.

A bright start to 2013 was in place as reduced interest rates played a big part in greater consumer confidence, higher building approvals, and GDP growth far in excess of other economies across the world.

However, continuing poor international news combined with a drop in the value of mining exports to affect the recovery which appeared to be strongly underway early in 2013.

The calling of a federal election nine months out for September 2013 probably helped dull consumer confidence to a degree as well, as is generally the case with the uncertainty created in the time between the calling of an election and the actual election taking place.

The drop in Australia's mining sector was evident last week as the Australian Bureau of Statistics (ABS) released the Gross Domestic Product (GDP) for the first quarter of 2013.

The results showed negative growth in the mining state of WA, indicating a further drop in mining investment however it is argued that this drop in investment will be replaced by greater exports as projects are moving into production phases.

What these numbers did unveil for Western Australia is that the state is in recession on the back of two consecutive quarters of negative growth, or contraction.

Despite this disappointing news, the overall Australian economy did move forward by .6%, or an annualised 2.5% which is a far sight better than most other international economies.

So while a significant part of Australia is in technical recession and there are indicators that the mining boom is wavering, the country still managed to continue forward which, if compared to the world stage, is a relatively strong position.

The downside is that the strong economic recovery indicated and hoped for in the early part of 2013 may require another interest rate drop and more time to gain further steam.

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