SYDNEY, Sept 2: Australia's economy expanded at its slowest quarterly pace for more than two years as mining and construction activity fell and exports declined, data showed Wednesday, hit by weakening growth in its biggest trading partner China.
Resources-driven economies such as Australia, Brazil and Canada have been hurt by softening Chinese demand for commodities, which has triggered a dive in prices for metals and oil, sending their currencies tumbling and hitting revenue.
Canada, the world's fifth-largest oil producer, said Monday it had fallen into recession for the second time in seven years, while Brazil's GDP contracted for the first two quarters of this year.
Economic growth in Australia -- of which iron ore and coal are its largest exports -- expanded at a slower-than-expected 0.2 percent in April to June, taking the annual rate of expansion to 2.0 percent, the Australian Bureau of Statistics said.
The latest figures -- which followed strong 0.9 percent growth in the first quarter -- were softer than analysts' expectations of June quarter growth of 0.4 percent for year-on-year growth of 2.2 percent.
The Australian dollar, a risk proxy for China, was already reeling from fears about the health of the world's second-largest economy and briefly slipped below 70 US cents to 69.95 US cents before recovering.
Australian Treasurer Joe Hockey sought to allay fears about the economic outlook and said while his country had been hit by its biggest fall in the terms of trade for more than half a century, the economy had avoided a recession for 24 years.
"At a time when other commodity-based economies like Canada and Brazil are in recession, the Australian economy is continuing to grow at a rate that meets and sometimes beats our most recent budget forecast," he told reporters.
"The diversity and flexibility of the modern Australian economy is continuing to get us through the recent massive falls in commodity prices."
- Recession risk? - The last time the economy expanded at this pace was in the March quarter 2013, and before that, the weakest reading was a 0.4 percent contraction in the three months to March 2011.
Mining production "fell significantly" by 3.0 percent for the quarter, although growth through the year was 2.1 percent, the statistics bureau said, adding that the weaker data came as exports also fell.
Net exports detracted from GDP growth by 0.6 percentage points for the three months. ?AFP