A slowing Chinese economy will keep the pressure on the Reserve Bank of Australia (RBA) to cut the cash rate again, economists say.
New data released on Monday showed China, Australia's number trading one partner, had slowed over the first half of 2013 to an annual growth rate of 7.5 per cent.
"The Reserve Bank will keep a close eye on Chinese activity given its importance to Australia's growth profile," Commonwealth Securities economist Savanth Sebastian said in a note to clients.
He said the latest results were unlikely to alter the RBA's bias to ease monetary policy further, and expects a cut in the cash rate to a new all-time low of 2.5 per cent at its August meeting, from 2.75 per cent.
The Chinese data showed the economy grew at an annual rate of 7.5 per cent in the June quarter, after 7.7 per cent in the previous three months and 7.9 per cent in the December quarter.
A National Bureau of Statistics spokesman said China's economic performance in the first half was "generally stable".
"However, we are still faced with grim and complicated economic situations," he added.
Still, financial markets expressed a sigh of relief that the June quarter outcome was in line with expectations.
The Australian dollar had sunk below 90 US cents for the first time in nearly three years late last week after China's finance minister Lou Jiwei was quoted as saying the economy was growing at a slower pace than the official 7.5 per cent forecast.
China's official news agency Xinhua subsequently corrected the report. But it left the markets in an uneasy state before the data.
The dollar was trading just above 91 cents on Monday after the data.
The data came just days after the International Monetary Fund cut the outlook for Asia's developing economies, including a notable 0.6 percentage point downgrade to Chinese growth in 2014.
Finance Minister Penny Wong said the big resources and investment boom that Australia has enjoyed over recent years is plateauing and coming to an end.
"The focus of economic policy, and the focus very much of this election will need to be on which party can provide the plan for the future that steers Australia through this time of change," she told reporters in Canberra.
Share
