Australian Bureau Of Statistics reveals a 0.5% economic growth in Q4 amidst the Coronavirus complications

The Australian Bureau of Statistics (ABS) revealed the quarterly GDP report on Wednesday. The data suggested higher than expected expansion in the Australian economy in the recent quarter. Despite the raging bushfires and the rapid spread of Coronavirus across borders weighing heavily on travel and tourism industries, Wednesday’s data helped to erase the rising risks of a recession in Australia. Coronavirus driven pressure on the global economy pushed the Reserve Bank of Australia (RBA) to cut rates to 0.50% on Tuesday that marked the lowest in history. The U.S Federal Reserve also opted for the first emergency rate cut in over a decade on Tuesday to provide the required support to the economy.

Analysts Had Forecast A Lower 0.4% Economic Growth In The Fourth Quarter

The economic growth in Australia was reported at 0.6% in the previous quarter while analysts had forecast 0.4% growth in the recent quarter. In fiscal 2019, the annual rate of economic growth remained capped at 2.2% that was reported below what the policymakers call a “trend” at 2.75%. Beating the forecast on Wednesday, the economic data fueled the Aussie dollar to around 0.6614 against the greenback from a low of 0.6578. A day earlier on Tuesday, AUD/USD was seen trading as high as 0.6645. The stronger than expected results for the fourth quarter were primarily attributed to tax benefits and discretionary spending by Australian households. The increase in home sales and greater resource exports also contributed to the positive data. The decline in domestic goods and services prices also helped support economic growth in the recent quarter. Such a drop, however, also suggested weaker demand and underlying growth at large.

National Australia Bank Predicts Another Quarter Point Of Rate Cut In April

According to ABS, the A$2 trillion Australian economy saw a 0.5% growth in the recent quarter to end its 29^th year in a row without a recession. Owing to the rising complications of Coronavirus that has so far affected more than 90,000 people around the globe and over 3,000 deaths, Australian Treasurer Josh Frydenberg remained cautious of the outlook in the current quarter as the retail, travel/tourism, and education sectors remain under pressure. He further remarked, however, that the government is committed to launching schemes that can help Australians keep their jobs and promote business in general. According to National Australia Bank economist, Kaixin Owyong, the central bank is likely to opt for another quarter-point of rate cut in April if the virus is not contained. She also highlighted that the RBA may also have to resort to quantitative easing if the emergency persists.