Bloomberg reported that Australia economy expanded at more than twice the pace economists forecast sending the local currency, bond yields and stocks higher and prompting traders to pare bets on a half-point interest-rate cut next month.

A Bureau of Statistics report released in Sydney showed first quarter gross domestic product advanced 1.3% from the previous three months when it rose a revised 0.6%. The country AUD 1.45 trillion economy, the world 13th largest is forecast by the International Monetary Fund to overtake Spain as the 12th biggest this year.

The Australian dollar jumped almost 1 percent as concern eased that Europe fiscal crisis and slower growth in China will derail an economy Reserve Bank Governor Mr Glenn Stevens says is experiencing modest growth. An estimated AUD 500 billion pipeline of resource projects by companies such as BHP Billiton Ltd has helped cushion a slump in manufacturing and services hit by a strong currency.

Mr Shane Oliver head of investment strategy at AMP Capital Investors Ltd which has almost USD 124 billion under management said “We’ve got a mining boom boosting investment dramatically. On the other hand, the non-mining economy is really struggling.”

Source - Bloomberg

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