Todays National Accounts show continuing strong economic growth with the Australian economy growing by 3.6 per cent through the year to the December quarter 1997. This outcome is fully consistent with the Governments forecast growth of 3 - per cent in 1997-98.
More recent indicators, including retail sales and business investment intentions, confirm that the momentum of growth is being maintained. The outlook for the Australian economy remains positive, notwithstanding adverse economic developments in our region.
Our record of strong economic growth and low inflation puts Australia firmly at the top end of the international league and will support continued solid employment growth during 1998.
The strong growth in the year to the December quarter 1997 was underpinned by strong private business investment, which grew by 8.6 per cent over the year, and a strong rebound in private consumption. The December quarter New Private Capital Expenditure survey suggests a continuation of very strong business investment growth in 1998-99.
The quarterly National Accounts are volatile and care always has to be taken in interpreting any one quarters estimate. For example, the 2.2 per cent fall in exports and 4.4 per cent fall in business investment in the December quarter largely reflects the continuing effect of one-off transactions - such as RBA gold sales and the sale of Loy Yang B and DAS businesses - that artificially boosted the June and September quarter outcomes. Abstracting from these transactions, exports grew by 0.3 per cent while new business investment fell by 0.6 per cent in the December quarter.
Import growth slowed in the December quarter, rising by 1.6 per cent in constant price terms.
The stocks to sales ratio is very low, suggesting there is no stock overhang, which contributes to the positive outlook for the economy.
In the year to the December quarter growth was concentrated in the service industries, particularly communication, property and business services and retail and wholesale trade. Construction, manufacturing and mining output also grew solidly, while production fell in the agriculture and education industries.
Corporate profits grew solidly in the year to the December quarter, which will support a continuation of the very positive environment for business investment evident in the Accounts.
The Accounts provide further evidence of Australias success in locking-in low inflation. The private consumption deflator rose by 0.3 per cent in the December quarter and by 1.2 per cent through the year, broadly in line with movements in underlying inflation.