Australia’s economy reported its slowest growth rate in over two years with gross domestic product growing only 0.2 percent in the second quarter, according to figures released by the Australian Bureau of Statistics Wednesday. A slowdown in mining and construction coupled with lower exports contributed to the low growth for the period covering three months ending in June.
The statistics bureau reported that mining production was down by three percent this quarter, contributing to the drop in exports. Mining-related construction was also down. Overall mining production for the export rich nation was still positive for the year at 2.1 percent.
News of the economy’s performance drove the Australian dollar down below U.S. $0.70 for the first time in six years before making a slight recovery, according to ABC News Australia. The figures were worse than expected by experts after Australia experienced 0.9 percent growth in the last quarter.
Australian media reported that, along with a weak first quarter in 2013, this was the worst growth experienced since 2011 when the country was still recovering from the economic crisis of 2008 and was hit by flooding in Queensland. Experts now fear that Australia could face a recession.
The Wall Street Journal reported that before the data was released, Australian businesses were already planning to cut back on spending plans. Several economists told the Wall Street Journal that it was possible that Australia’s central bank would again cut interest rates.
“Australia’s growth slowdown could bring rate cuts back on the agenda,” said Daniel Martin, a senior economist at Capital Economics in Singapore, in an interview with the Wall Street Journal.
The health, transport and finance industries contributed 0.1 percentage points each to the growth in GDP, according to the Australian Bureau of Statistics. The Bureau noted that the domestic demand from household and government consumption were among the positive contributions to GDP growth.