Australian economy records marginal growth

CANBERRA, Australia (AP) - The Australian economy recorded its weakest performance in more than two years in the three months ending June 30, growing just 0.1 percent from the previous quarter, according to official figures released Tuesday. 

Analysts had expected the quarterly figure to be worse, given slumping company profits and a battering of exports by a two-year drought hitting Australia's agricultural sector, weak world economic conditions and SARS. 

The Australian Bureau of Statistics said the economy grew 2 percent in the year to June, which was also the lowest annual rate of growth since 2001. 

A year earlier, the annual growth rate was 3.8 percent. 

Despite the slowing growth, Treasurer Peter Costello said the economy is well placed to meet the challenges of a weak global economy. 

"The outlook for the economy remains favorable, with domestic demand retaining significant momentum, underpinned by historically high levels of consumer and business confidence,'' he said in a statement. 

The latest quarterly result compared to 0.6 percent growth in the March quarter, the bureau said. 

The June figure was the worst since the economy shrank by 0.6 percent in the three months to December 2000, after the introduction of a new goods and services tax and a post-Sydney Olympics slowdown distorted consumer spending and dragged annual growth down to 2.7 percent. 

In the latest period, household spending was the key driver of growth, adding 0.7 percentage points. 

The continued effect of the drought dragged the farm economy backward by 5.7 percent, while the rest of the economy expanded by 0.3 percent in the quarter, the statistics agency said. 

The figures were released as the board of the Reserve Bank of Australia met to discuss interest rates. 

The bank was widely expected to leave its official cash rate unchanged at 4.25 percent, with fears of overheating the housing market outweighing concerns about the export slump and a stumble in growth. 

The bank's decision was to be announced Wednesday. - AP 

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