AUSTRALIA’S economy grew more than expected in the second quarter, data showed today, despite the “unrelenting pressure” of interest rate hikes and global turmoil.

Gross domestic product expanded 2.1% on-year in April-June, slightly less than the previous month but better than forecasts of 1.8%.

From the previous quarter, it grew 0.4%, which was in line with estimates and faster than Germany, France and the United Kingdom.

Although Australia was in a position of “relative strength”, Treasurer Jim Chalmers cautioned that it remained vulnerable as China – a key trading partner – struggles with its own economic malaise.

“This is a steady result, but we know that households are under pressure from the rising cost of living and higher interest rates,” Chalmers said as he announced the country’s national accounts.

“Inflation is moderating but is still too high and we’d like to see it moderate faster.”

Chalmers warned the economy was likely to “slow considerably” over the coming year, echoing a similar message earlier this week by the country’s central bank, which has lifted borrowing costs 12 times since last year.

Reserve Bank of Australia governor Philip Lowe kept the key rate unchanged at 4.1% yesterday, citing “uncertainty surrounding the economic outlook”.

Strategists at National Australia Bank said in a note that the “result will have little direct implication for monetary policy in the near term. The RBA has become increasingly confident that higher rates are working to slow demand and see a better balance within the economy – and (the) data provides further evidence of this”. – AFP, September 6, 2023.