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Aust. economy growing, despite dry
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's economic growth rate is continuing to outstrip that of most of its OECD counterparts, despite the impact of a devastating drought. National accounts figures released Wednesday by the Australian Bureau of Statistics (ABS) show the economy grew a seasonally adjusted 0.9 percent in the September quarter, for an annualised rate of 3.7 percent from September 2001. That was in line with economists' expectations. But the upbeat figures could not stop a decline on the stock market Wednesday in the wake of Wall Street's sell-off, with the benchmark S&P/ASX200 down 1.52 percent by the afternoon. Earlier in the day, the central Reserve Bank of Australia again chose not to act on interest rates, leaving its benchmark cash rate unchanged at 4.75 percent. According to the ABS, economic growth in the September quarter was driven by consumer spending, business investment, inventory build-up and a buoyant construction industry. Farming downturn
These positive contributors were offset by a downturn in farm output and trade because of the drought. Sydney-based chief economist for UBS Warburg, Mark Rider, told CNN that the latest Australian national accounts were a "good set of figures" showing the sort of growth that most countries would love to have. He said while the drought was having an impact on farm output, the agricultural sector represented only 3 percent of the overall economy. Rider said the UBS Warburg view was for a 0.5 percent drop in GDP next year because of the drought. This is a more optimistic view than that of the Australian government, with Treasurer Peter Costello last week cutting the growth outlook to 3.0 percent for the year to next June, down from a 3.75 percent forecast six months earlier. Costello cited the sharp drop in Australia's rural output, plus continued global economic uncertainty. Crop downgradeEarlier this week, the national commodity forecaster ABARE downgraded the southern summer rice and cotton crops by 70 percent and 45 percent respectively because of the lack of water. ABARE had already substantially downgraded the 2002-03 winter harvest for the four main crops of wheat, barley, canola and lupins, saying in October that the harvest would be down 57 percent from the previous season. The latest ABS figures for the broader economy came after the central bank again left rates on hold, following its board meeting on Tuesday. If it had decided to change rates, it would have made the announcement at 9.30 a.m. local time on Wednesday. The bank has now left rates unchanged since tightening by 0.25 percentage points to 4.75 percent in June. Rates were at a 30-year low of 4.25 percent from December 2001 to May this year. UBS Warburg's Rider said he expected the Reserve Bank would sit tight for all of next year and he was not expecting the next rate change until 2004.
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