NO.089

The Australian economy grew strongly by 1.6 per cent in the September quarter and

4.5 per cent through the year. In trend terms, which removes some of the

quarterly volatility, economic growth in the September quarter was a solid 0.8 per

cent. The National Accounts also indicate that this strong growth continued to be

accompanied by very low inflation. These latest figures are consistent with the

Government’s forecast of average growth of 3 per cent in 1999-2000.

Australia’s ongoing strong economic growth and low inflation outcomes compare more

than favourably with other industrialised economies.

The September National Accounts continue to portray a resilient economy, with

widespread growth recorded amongst the various components of domestic demand. Private

consumption continued to grow in the September quarter, along with both dwelling and

business investment.

Net exports detracted from growth, with rising import volumes in response to strong

domestic demand more than offsetting a rebound in Australia’s export volumes. A

continued gradual improvement in export growth and commodity prices is expected in the

period ahead as world growth continues to strengthen.

The National Accounts also provide further evidence of moderate price and wage

pressures. The household consumption deflator rose by 0.5 per cent in the September

quarter and by just 1.4 per cent through the year. Average earnings of employees

increased by 1.1 per cent in the September quarter and by 2.7 per cent

through the year.

In summary, the National Accounts provide further evidence of continuing strong

economic growth as the dividends continue to flow from a more flexible and resilient

economy brought about through sound and transparent economic policies. The

Government’s major tax reforms will help to maintain this momentum in the period

ahead. The Australian economy is set to end the millennium with an impressive record of

strong low inflationary growth, together with the lowest unemployment rate in almost a

decade – outcomes which have been achieved despite slower world economic growth. As

outlined in the 1999-2000 Mid-Year Economic and Fiscal Outlook, the Australian

economy is expected to grow by around 3 per cent in 1999-2000 and 3- per cent in

2000-01, with a declining trend in unemployment and low inflation.

CANBERRA

15 December 1999