Healthy ... annual growth last year was the highest since 2007.

Healthy … annual growth was the highest since 2007. Photo: Virginia Star

Australia’s economy grew 0.6 per cent last quarter, a slight improvement from the September quarter, taking growth for the year to 3.1 per cent.

Economists expected the economy to grow by 0.6 per cent in the December quarter and 3 per cent for 2012.

The annual growth was the highest since 2007, when the economy grew by 3.8 per cent.

Citi senior economist Josh Williamson said although the headline numbers matched the market’s expectations, the underlying results “showed a fairly soft profile for growth”.

“Most measures of consumption were fairly weak in the quarter, and if it wasn’t for a particularly large, and some would say, abnormal increase in public sector capital investment, GDP would be a lot weaker.”

Growth in the fourth quarter was driven by a 1.1 per cent contribution from public investment and 0.6 per cent from net exports, the Bureau of Statistics data showed.

Private investment fell 1 per cent while there was a 0.4 per cent slide from changes in inventories.

The mining, manufacturing, health and finance sectors all contributed about 0.1 per cent to GDP growth.

At the same time, the terms of trade fell by 2.7 per cent in the December quarter.

Some analysts revised their estimates upwards this week, after a raft of economic data – such as the first estimates of companies’ 2013-14 capital expenditure, retail sales and current account deficit – pointed to continued momentum in the Australian economy despite an expected slowdown in mining investment.

Yesterday, the Reserve Bank kept interest rates at 3 per cent, saying that the current settings were appropriate for the economy with subdued non-mining investment and moderate consumer spending.

At the same time, retail sales bounced back from three months of falls, rising by 0.9 per cent in January, while the current account deficit narrowed and government spending increased.

Australia’s economy has remain resilient despite global economic headwinds and a strong currency, with its counterparts in Europe, the United States and Asia continuing to battle high unemployment and a fragile recovery.

The Australian dollar spiked to 102.77 US cents, a high for the day, following the data release.

More to come

Australia’s annual GDP growth (per cent)

2012: 3.1
2011: 2.7
2010: 2.8
2009: 2.5
2008: 1.6
2007: 3.8
2006: 3.2

Country 2011 (% change) 2012 (% change estimate)

Australia 2.14 3.305
France 1.693 0.122
Germany 3.096 0.936
Italy 0.431 -2.292
Japan -0.755 2.224
Korea 3.634 2.688
New Zealand 1.347 2.228
Sweden 3.968 1.245
United Kingdom 0.758 -0.38
United States 1.808 2.17

International Monetary Fund, World Economic Outlook Database, October 2012