Australia’s economic growth accelerated in the final three months of last year, the eighth straight quarterly expansion, before floods and cyclones this year ravaged the nation’s northeast.

Gross domestic product advanced 0.7 percent from the third quarter, when it rose a revised 0.1 percent, the Bureau of Statistics said in Sydney on Wednesday. That matched the median forecast in a Bloomberg News survey of 25 economists.
The report validates Reserve Bank of Australia Governor Glenn Stevens’s view that natural disasters in the state of Queensland this quarter will be only a temporary drag on growth. The nation is undergoing a boom in resource investment as mining and energy firms boost output to meet demand from China and India.
“Today’s result is unlikely to alter policy makers’ broad view of the world,” Australia & New Zealand Banking Group economists Riki Polygenis and Julie Toth wrote in a research report after the data. “The overall outcome was in line with the RBA’s latest forecast.”
Australia’s dollar, the world’s fifth-most traded currency, touched a record $1.0256 on Dec. 31. After Wednesday’s GDP report was released, the currency fell to $1.0100 as of 1:54 p.m. in Sydney from $1.0145 before the report.
Torrential rains in Queensland in December and January affected about 30,000 properties, shut coal mines, cut rail lines and damaged crops. Victoria state was also hit by floods.
----------Flood effects
Treasurer Wayne Swan said Wednesday he estimates the deluge cut 0.4 percentage point from growth last quarter. He said the first three months of this year “will be a very difficult quarter and reflect the impact of floods and cyclones.”
The economy grew 2.7 percent in the fourth quarter from a year earlier, the same pace as the third quarter, the report showed. Economists forecast a 2.8 percent year-over-year expansion.
The RBA last month raised its forecast for 2011 growth to 4.25 percent, from a November prediction of 3.75 percent, saying flood rebuilding will accelerate in the second half. Consumer prices will rise 3 percent, from a previous estimate of 2.75 percent, it said.
Commodity exports from Australia, the largest shipper of coal, iron ore and wool, may gain 14 percent to a record next financial year, driven by rising prices, the federal government’s forecaster said this week.
--------------Sales abroad
Sales may expand to A$251.3 billion ($255 billion) in the 12 months to June 30, 2012, the Canberra-based Australian Bureau of Agricultural & Resource Economics & Sciences said March 1 in a report. The agency revised its forecast for the current year to A$220.6 billion, from A$211.1 billion in December.
Australia’s terms of trade advanced for a fifth straight quarter, gaining 1.1 percent, Wednesday’s report showed.
The RBA has a “sanguine” attitude about the outlook for consumer prices, economists at Citigroup Inc. and HSBC Holdings Plc said this week.
Stevens left the overnight cash rate target at 4.75 percent for a third straight meeting on Tuesday and said inflation “over the year ahead will continue to be consistent with” a target of 2 percent to 3 percent.
A risk in Stevens’s focus on growth over inflation is that the local currency’s rise may abate and wages could surge in an economy with 5 percent unemployment. Bond investors have raised bets on higher inflation as the labor market approaches full employment and companies increase investment to meet demand from India and China for iron ore and energy resources.
--------------5% unemployment
Chinese purchases of iron ore and coal are prompting companies such as BHP Billiton Ltd. to expand production. The RBA raised its benchmark interest rate seven times from October 2009 to November last year, reining in household spending and spurring higher savings that allowed the central bank to extend its pause on Tuesday.
“Australia’s terms of trade are at their highest level since the early 1950s and national income is growing strongly,” Stevens said on Tuesday. “Private investment is picking up, mainly in the resources sector, in response to high levels of commodity prices.”
Australian business investment climbed to a record in the fourth quarter and a government report last month showed employment climbed by 24,000 in January, surpassing the median forecast for a 17,500 gain in a Bloomberg News survey of 20 economists. The jobless rate of 5 percent matched the lowest level in two years.
----------------Mining investment
Policy makers expect annual growth will be boosted by projects such as BG Group Plc’s $15 billion liquefied natural gas venture in Queensland, generating 5,000 construction jobs.
BG, Chevron Corp., Royal Dutch Shell Plc and ConocoPhillips are among energy companies investing about A$200 billion in proposed LNG projects in Australia.
Stevens last month signaled little urgency about raising rates.
“We’re ahead of the game, which is where you want to be, and that’s the thing that affords you periods of sitting, waiting and watching,” he told lawmakers in Canberra on Feb. 11. “Sometimes, they can be reasonably lengthy periods.”
(Source: Bloomberg)