Australian economic growth picks up pace at end of 2010

LONDON. March 2. KAZINFORM Australia's economy has picked up pace in the fourth quarter of 2010, despite some of the worst flooding in the country's history; Kazinform refers to BBC News.

Gross domestic product rose by 0.7% in the October to December period, up from 0.1% growth in the previous quarter, the statistical office said.

That pushed the full-year growth rate to 2.7% in 2010, which is in line with initial forecasts.

Analysts said they see growth accelerating further this year.

Full impact

However, they warned that the first three months of 2011 may prove difficult as the full impact of flooding in Queensland and Victoria sinks in.

"You are getting off to a soggy start and a big rebound in the second half," said Stephen Walters of JP Morgan.

He added that the pace of economic growth will pick up so quickly that it is likely to force interest rates higher.

"It is going to seem really sluggish and then it is going to be the biggest boom you have ever known, so I think the Reserve Bank of Australia are going to have to look through that," he added.

Australia's central bank has left the borrowing costs unchanged for four months in the row, saying consumer price growth is within its target range.

Its main borrowing cost is currently at 4.75%; Kazinform cites BBC News.

See www.bbc.co.uk for full version