Today Australia reported their Q1 GDP as an unexpected increase of 0.4%. According to a Bloomberg survey, economists were expecting a decline of 0.2%. If the GDP would have been negative, Australia would have technically fallen into a recession with two consecutive negative quarters.
A major increase of GDP came from exports. China is Australia's largest trading partner. Its important for China's economy to stay strong. In recent weeks the AD has increased along with commodity prices. Some of the growth also came from household spending due to the government's stimulus policies. It is uncertain how well the Australian economy will grow in the second quarter as the stimulus policies may not have the same impact. There is talk that rates will still decrease in Australia.
However, business investment is still declining and unemployment has increased to 5.4%
Now Australia can join the elite club of countries that have not fallen into a recession such as China with a 6.1% Q1 GDP and India with 5.8% GDP. Perhaps this will be the beginning of a trend for other countries to improve their GDP's. As the emerging markets grow and become wealthier, Australia maybe well positioned to enjoy some of that growth for years to come.
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