Economists expect below average GDP

1 Jun 2012, 3:21 pm   -   Source: AAP

Economists expect gross domestic product data released next week to show the economy grew at a below average pace in early 2012

Australia's mining industry might be the only bright spot in the economy's lacklustre start to 2012.

AAP's survey of 13 economists on Friday has revealed a median forecast for the economy to grow by 0.6 per cent in the three months to March.

That would be slightly higher than the 0.4 per cent growth recorded in the final quarter of 2011.

But it would still be below the 30-year average of 0.8 per cent quarterly growth.

The Australian Bureau of Statistics will release gross domestic product data (GDP) for the March quarter on Wednesday, June 6.

AMP chief economist Dr Shane Oliver said that, with the housing and manufacturing sectors struggling, the only reason the economy was growing at all was the strength of the mining industry.

"At the end of the day the Australian economy is riding on the mining boom, if you take that out we'd probably be in recession," he said.

The survey also revealed a median forecast for annual GDP growth to be at 3.3 per cent, around its long term average.

However, Dr Oliver said that figure reflected strong GDP growth in the middle of last year, as the economy bounced back after flooding depressed growth earlier in 2011, rather than its more recent performance.

Bank of America Merrill Lynch Australia chief economist Saul Eslake said that the weakness in other parts of the economy was offsetting the positive effects of the mining boom.

"The benefits of the mining boom are passing through to other parts of the economy, I wouldn't suggest that they are not," he said.

"But the rest of the economy is that much bigger and it's pretty weak."

He said GDP growth was likely to remain weak for the next few quarters.

"We remain unconvinced that the economy is returning to trend growth any time soon."

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