Australia's economic growth was the slowest economic growth in two years over the second quarter due partly due to a sharp fall in export volumes, according to official data released today, sending the Australian dollar to its lowest in over six years.
According to The Australian Bureau of Statistics, gross domestic product expanded by 0.2 per cent in the second quarter, down from a solid 0.9 per cent the previous quarter, which was the slowest quarterly pace since the first quarter of 2013.
The closely-watched measure of real net national disposable income declined 0.7 per cent in the year to June.
"A lot of it appears to be statistical payback. Nevertheless, smooth out the last few quarters and it looks like we're running at somewhere around a 2.3 per cent annual rate so it's a soft outcome whichever way you cut it," said Michael Blythe, chief economist at Commonwealth Bank, Reuters reported.
The result is short of the median forecast of 0.4 per cent growth, and gave investors already spooked by China's slowdown an additional incentive to hammer the Australian dollar to below 70 US cents.
The biggest contributors to growth in the quarter were government and household consumption.
Economists had forecast 0.4 per cent growth in the April-June quarter after the country's resource-based economy grew by 0.9 per cent in the January-March quarter.
Annual growth for the year through June came in 2.0 per cent, well below long-term average of 3.2 per cent.
According to treasurer Joe Hockey, the latest figures showed that the Australian economy was resilient because other resource-reliant economies including Canada and Brazil are now in recession.
"The transition away from a reliance on mining investment is well underway," Hockey told reporters. "Quite clearly there is resilience in the Australian economy that other economies that have huge exposure to commodity prices could only wish for."
As the Australian economy enters its 25th year of continuous growth, falling prices for iron ore and coal, which are the nation's biggest exports, had hurt growth rates in the past few years.
According to government data released yesterday, Australia's trade deficit widened by 41 per cent in the June quarter to A$ 19 billion.
Hockey added that a slowdown in mine construction had been offset by increases in the building and services industries.
Wollongong Coal, majority owned by Jindal Steel and Power, on Tuesday announced the closure of its Russel Vale Colliery, one of Australia's oldest coal mines, amidst rising costs of production and falling prices of coal and little demand for the fuel. (See: Jindal Steel shuts coal mine in Australia as losses mount).