Australia's economy powers ahead on exports

Australia's economy defied expectations with stronger-than-expected expansion in January-March, driven by net exports and household spending, to take annual growth to its highest level in recent years. Economic growth expanded by 1.1 percent in first quarter for an annual year-on-year reading of 3.1 percent, far above economists' forecasts of 0.8 percent and 2.9 percent, the Australian Bureau of Statistics figures showed. The data came just a month before national elections, which are expected to be tightly contested, with the ruling conservative government campaigning on a platform of jobs and growth as the mining-dependent economy shifts away from an unprecedented boom in resources investment. The Australian dollar, which had already jumped by half a cent following strong exports data on Tuesday, rose again by another half a cent from 72.38 US cents before the data to 72.90 US cents. Prime Minister Malcolm Turnbull said there were "strong signs" about economic growth in the figures but warned that the global economic situation remained uncertain. "There is plenty of risk out there on the horizon. We are in an uncertain economic environment globally. Many opportunities, great opportunities but great challenges," he told reporters in Brisbane. Exports contributed 1.0 percentage points to the March quarter growth while household spending added 0.4 percentage points, the data showed. "The mix of growth is pretty much as expected. Net exports delivering the bulk of the growth, if not all," JP Morgan economist Tom Kennedy told AFP. "Household consumption -- that was also decent. The big... and persistent drag has been capex (business spending) in the private sector, that's taken half a percentage point off growth." The Australian economy has been charting a rocky growth path as it exits the mining investment boom that has helped it avoid a recession for a quarter of a century. The Reserve Bank last month slashed interest rates to a new record-low of 1.75 percent amid weak inflation numbers to help boost growth in non-resources industries.