Chinese GDP Growth to Spur on Australian Economy - 16 July 09

A surprise surge in China's economic growth will boost the Australian economy as demand for local commodities rises. China's economy expanded by 7.9 percent over the second quarter of 2009, its government said today, outstripping economists forecasts of 7.5 percent.

Economists said the surprise uplift was good news for the Australian economy, which has so far survived a technical recession on the back of Chinese demand for resources.

China's industrial output rose by 9.1 per cent in the second quarter from a year earlier, according to official figures published today.

Savanth Sebastian, an economist at CommSec, said China's economy is on track for a sharp rebound which, going forward, puts Australian commodities in a "very popular light".


"Industrial production has picked up significantly, which means their insatiable appetite for Australian resources will continue," he told ninemsn.

Australia provides the most cost effective answer to China's resources demand, Mr Sebastian said, thanks to the high quality iron ore and our close geographical proximity.

Katie Dean, senior economist at ANZ, told ninemsn a recovery in China’s economy would continue to support the home economy. Ms Dean said China's recovery is good news for Australia as it will spur on commodity demand leading to a rise in the Aussie dollar.