Australian 1st Quarter GDP...

Australian Economy Contracts in the First Three Months of 2011 

The Australian economy has shrank in the first quarter of this year, the most shrank in two decades, less than expected as exports, one of the mail pillars for economic growth in Australia, dropped after the natural disaster hit the nation that caused to hurt mining sector, railways and farmland. 

The Australian gross domestic product contracted by 1.2% during the first quarter of the year, compared with a previous expansion by 0.7% in the 4th quarter of 2010, while the forecasts estimated of -1.1%. 

Moreover, The GDP (YoY) concerning the first quarter shrank to 1.0% from a previous of 2.7%, while the actual reading came inline with the expectations that referred to 1.0%. 

The nation’s exports slumped 8.7% in the quarter through March, subtracting 2.1% from economic growth, while the household spending increased 0.6%, which added 0.3% to growth. 

Furthermore, Australia’s current-account deficit widened more than economists forecast in the three months through March as the natural disasters hurt resource shipments. The Australian current account Balance for the 1st showed a deficit by A$10447 million, compared with a pervious deficit of A$7299 Million that was revised to a deficit of A$8091 million, while the expectations were for A$10000 Million deficit. 

As for the government’s efforts to help the economy to rebound, the government aimed to encourage companies to increase their expansion that will help to hire more worker, because of the Bank targeted to decline the unemployment rates in the upcoming period. 

While the government forecasts mining investment of A$76 billion next fiscal year, spurring companies to hire workers and prompting the RBA to predict the unemployment rate will fall to 4.25 percent by December 2013. Australia recorded its biggest annual job growth on record last year before hiring cooled. 

Expanding resource projects helped Australia post record employment growth last year before hiring cooled in the first four months of 2011. Still, the number of unemployed Australians in April fell to the lowest level since January 2009. 

Meanwhile, the Reserve Bank of Australia (RBA) decided to leave interest rates steady for fourth consecutive month at the highest level of 4.75% as the Bank sees the Australian dollar has helped to contain some of inflation rates during this period. 

Australian building approvals slumped to -1.3% in April compared with the pervious incline by 9.1%, which was revised to 8.6%, while the expectations were set at -1.8%. 

Moreover, annualized building approvals retreated to -11.5% in April, from -18.1% last year, whic was revised to -19.3%, where the actual reading came in higher than expectations of -12.7%.