The economy ran at a healthy clip in the final months of 2010, but Treasurer Wayne Swan has again warned that this summer’s natural disasters will have had a big impact on growth.

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Mr Swan said Wednesday’s national accounts for the December quarter were “impressive” given the economy was already being hit by “wild weather” in late December.

The national accounts show that gross domestic product (GDP) expanded by 0.7 per cent in the December quarter, a smart rebound from the mere 0.1 per cent growth in the September quarter after a downward revision.

This left the annual GDP rate at 2.7 per cent, in line with the Reserve Bank’s forecast made last month.

“This is further confirmation that the economic fundamentals in the Australian economy are strong, despite some soft spots in the economy and, of course, recent natural disasters,” Mr Swan told parliament.

“Because we are in a strong position we can handle the savage impact of these natural disasters,” he said.

The impact of the floods in eastern Australia and Cyclone Yasi could possibly see GDP contract in the March quarter national accounts – which will be released in June – and would mark the first decline since the depths of the global financial crisis.

Mr Swan said GDP could be cut by around one per cent from the floods and cyclone in the March quarter, but then rebound in subsequent quarters.

These natural disasters would also take a heavy toll on the budget in terms of reconstruction and also lower activity.

But the treasurer insisted Labor was still determined to return the budget to surplus in 2012/13.

Commonwealth Bank chief economist Michael Blythe said the latest national accounts indicate that the weak September quarter GDP outcome was “an aberration rather than a change in direction”.

He said this momentum was necessary “to help absorb the weather-induced pothole” of the March quarter.

Mr Swan said exports helped underpin the GDP rise in the December quarter, despite coal sales being hit by the floods in Queensland that shut down key rail lines, reducing coal production by around $1 billion.

The quarter’s growth was also underpinned by a pick-up in machinery and equipment investment and rebuilding of inventories.

Household consumption rose by only 0.4 per cent, well down on historical trends, while savings remained at a high 9.7 per cent.

“Consumers appear to have become more cautious in the past couple of years with the saving rate rising considerably and credit growth slowing,” Mr Swan said at his traditional national accounts media conference.

However, stronger household balance sheets will ultimately improve the resilience of the economy, and support future spending, he said.

The nation’s terms of trade – the relative performance of exports to imports – rose by 1.1 per cent in the December quarter to be more than 22 per cent higher over the year, and the highest since the 1950s.

“The swing from trade deficit to trade surplus during 2010 indicates that the income boost from a higher terms-of-trade is hitting the economy,” Mr Blythe said.

Should consumers start spending again alongside a capital expenditure boom by business, this will pose inflation risks for the economy in 2011.

“The implication is that the (Reserve Bank) has more work to do,” said Mr Blythe, who is predicting 100 basis points of interest rate increases over the next year.