fell by 2.0 percent in the third quarter, largely due to a big drop in defence investment. That was a steeper fall than many analysts had expected and could take around half a percentage point from economic growth in the quarter.
It was no surprise then that Treasurer Wayne Swan warmly welcomed the RBA's largesse.
"Today's rate cut is the early Christmas present that hard-working Aussies deserve," he told reporters. "It comes at a time where unemployment is low, and economic growth is in much better shape than many other developed economies." Figures for gross domestic product (GDP) are due on Wednesday and were expected to show moderate growth of around 0.6 percent in Australia's A$1.4 trillion economy.
Such a result would see growth for the year slow to a still-respectable 3.2 percent, from 3.7 percent. But the balance of risks seems biased to the downside going into 2013.
Analysts estimate that fiscal tightening alone could shave between 0.75 and 1.5 percentage points off GDP growth in the year to end June 2013.