NO.030

NATIONAL ACCOUNTS:  MARCH QUARTER 1999

The stand-out performance of the Australian economy was maintained in the March quarter

1999.

GDP grew by 1.1 per cent in the quarter and by a very strong

4.8 per cent through the year to the March quarter. This sustained strong

economic growth and low inflation is a first class performance by world standards.

Australia’s growth of 4.8 per cent is higher than the major industrialised

economies of 1.6 per cent and more than twice the OECD average of 2.2 per cent. It is

higher than the United States, which grew by 3.9 per cent.

This is the sixth consecutive quarter of growth at 1 per cent or above – the first

time this has ever occurred in Australia.

The economy is being driven by very strong growth in domestic demand that will underpin

continued solid employment growth.

Business investment grew by 9.6 per cent in the quarter with plant and equipment up

21.6 per cent. Strong consumer spending continued –an outcome of the low interest

rates and low inflation that this Government’s economic policies have delivered.

Net exports detracted from growth in the March quarter. This is to be expected in a

period of slow world economic growth and robust growth in domestic demand. While our

exporters continue to be aided by low interest rates and a competitive exchange rate, the

relative weakness in exports in the March quarter is clear evidence of the difficult world

trading conditions. As the world economy strengthens into 2000, net exports will again

contribute to growth. However, as highlighted by yesterday’s current account deficit

for the March quarter, fiscal policy will need to ensure that the Commonwealth continues

to make a positive contribution to national saving.

Growth in the March quarter was spread widely across the economy, with particularly

strong growth recorded in agriculture, mining, communication services and wholesale trade.

The Accounts provide further evidence of subdued price pressures, with the household

consumption deflator rising by only 0.4 per cent in the March quarter and by 1.7 per cent

through the year, in line with the movements in the Consumer Price Index.

In short, today’s National Accounts once again demonstrate the tangible benefits

for an economy of sound macroeconomic policies and ongoing structural reforms. Despite the

Asian recession and slow world growth, we have achieved sustained strong economic growth,

subdued price pressures, rising real wages supported by growth in productivity and healthy

corporate profits.

CANBERRA

2 June 1999