SYDNEY Reuters -- Australia's economy got a much-needed boost from strong exports and government spending in the third quarter, which should have tempered the huge hit to activity from coronaviruses lockdowns.
While gross domestic product GDP probably suffered its second largest contraction in the last quarter, a timely 1.7 percentage point contribution from trade and public spending will soothe some of the pain.
The GDP report is due on Wednesday and is projected to show a drop of 2.7%, a contraction that was only surpassed by the 7.0% plunge that followed the start of the epidemic last year.
The virus shut down the states of Victoria and New South Wales for much of the quarter, and hammered consumer spending, has resulted in a drop in the drop.
The government stepped in with emergency aid which saw total public spending add A $3.5 billion $2.50 billion, or 0.7 percentage points, to GDP.
Australia saw a decline in import volumes due to strength in resource exports and a decline in import volumes, which saw real net exports add 1.0 percentage points to GDP in the quarter.
The country's current account surplus climbed to a record A $23.9 billion in the quarter, led by an 8% jump in exports.
After a bumper earnings season, Australian firms, particularly miners, paid out a lot more dividends to foreign investors.
In any case, a rapid economic recovery is underway as world-beating levels of vaccination have allowed most restrictions to be lifted, unleashing a wave of pent-up demand.
Retail sales surged a huge 4.9% increase in October as shops reopened, a splurge that banks say continued in November. CBA reported spending on its cards for the week to November 26 was 24% higher than in the same week of 2019 before the Pandemic hit.
The labour market has been surprisingly resilient with payrolls rebounding to above pre-lockdown levels in October, well ahead of expectations.
The government has been delaying the opening of international borders for two weeks, but stay-at- home rules are unlikely as 87% of the adult population is fully vaccinated.