The Australian economy has seen slower growth in the second quarter, as low commodities prices hit the country's key mining sector. Australia's Gross Domestic Product fell 0.2 percent from April to June 2015, below analyst consensus estimates of 0.4 percent, and down from 0.9 percent in the first quarter, the Australian Bureau of Statistics said in a report on Wednesday. The Australian dollar fell to a six-year low of 69.82 cents to the dollar in Asian morning trading, after the report. While growth was slower than expected, it remains within the track of the Reserve Bank of Australia forecast of 2 percent growth for this year, analysts said. But there is concern that growth will remain weak. "The good news is that Australia has avoided a negative GDP number, but the bad news is that growth remains extremely weak. The 0.2 percent in the quarter relied heavily on government spending. If we didn't have that we'd have dipped over into a recession," Shane Oliver, chief economist at Australian bank AMP, commented in a note published on Wednesday. The key mining sector, which accounts for 12 percent of GDP, has been badly hurt by the slump in global commodities prices - the slowdown in China, Australia's biggest export destination for mining, has bit deep into the sector's revenue. "Weak global commodity markets, notably those for iron ore and coal, and the consequent decline in resource-sector investment have generated job and output losses, although commodity production itself has not been cut back substantially.
"Positive adjustments in the non-resource sector are underway, with the exchange-rate depreciation lifting exports and employment; for instance, tourism has picked up. Meanwhile, house prices and credit growth continue to rise, especially in the largest cities," noted a report from the Organization of Economic Co-operation and Development in July.
But the OECD sees Australia back on track in 2016. "Output growth will pick up in 2016, and external uncertainties dominate the risk profile; strengthening private consumption will contribute significantly to output increases with housing construction and exports also playing a role. The unemployment rate is projected to decline as employment adjusts to sectoral shifts in demand due to economic rebalancing," it added. However, all this is dependent on commodities prices holding at current levels, the report warned. Should commodities fall further, it would put the brakes on growth, and could possibly drive the country into recession, according to the report.
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