Australian economy grows 2.8% in December quarter

ECONOMIC growth has returned firmly in the Reserve Bank's target zone, with the national accounts out Wednesday showing the Australian economy grew 2.8% over the year to December.

The ABS figures revealed a 0.8% rise in growth in the December quarter last year, mainly on the back of a 0.8% rise in household consumption and a fall in the household saving ratio.

Such figures were on the positive side of the RBA's stated growth target for this year of between 2-3%, when it chose to keep the cash rate on hold on Tuesday.

But the data was not quite as strong as Treasurer Joe Hockey would have liked, saying the numbers highlighted the "growth challenge" the nation he expects the nation to face as large resource construction jobs come to an end.

He said the government's plan to reduce regulation and "abolish taxes" would help smooth the transition, while the key to preventing rising unemployment was keeping the rate of growth above 3%.


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