Australia's economy beats expectations ahead of bushfire, coronavirus impacts

Australia's economy grew by a better-than-expected 0.5 per cent in the December quarter and 2.2 per cent over the past year, according to the Bureau of Statistics.

Most economists were forecasting quarterly economic growth of 0.3 or 0.4 per cent and annual growth around 2 per cent, although the lowest forecast was from AMP Capital's Shane Oliver, who tipped 0 per cent GDP growth for the quarter.

The Reserve Bank on Tuesday pre-emptively cut interest rates by 25 basis points in anticipation of a major growth hit from both bushfires and the coronavirus, while the US Federal Reserve surprised analysts overnight with a 50-basis-point move.

Treasury has estimated that the bushfires might take 0.2 percentage points from GDP, while the OECD has warned that coronavirus could hit Australian economic growth by at least 0.5 percentage points.

However, economic modelling by former Reserve Bank board member and ANU professor Warwick McKibbin found that the hit to Australian GDP in 2020 from even a moderate coronavirus pandemic would likely surpass 2 percentage points.

Read more: https://www.abc.net.au/news/2020-03-04/gdp-australian-economic-growth-december-quarter-2019/12023886