Trade turnaround keeps Australia in the black   (Category: Financial News) AUSTRALIA'S economy expanded in the March quarter while the rest of the developed world slumped, figures showed yesterday, unleashing a wave of confidence across local markets. Amid deteriorating business activity, a stunning trade performance helped the economy post 0.4 per cent growth, bouncing back from a 0.6 per cent contraction in the previous quarter. The ASX 200 surged 1.6 per cent to a seven-month high of 4017.20, while the Australian dollar closed at US82.46c, its highest since September. Boosted by the $42 billion stimulus package, retail trade was among the few sectors to expand, posting 0.8 per cent growth. ... the managing director of Maxim Asset Management, Winston Sammut, said investors were buoyed by the stronger than expected trade performance. "The market's been so beaten over the last six to twelve months that positive news is being welcomed even though it's being met with a bit of surprise," he said. After retreating to their home markets, Mr Sammut said global investors were starting to return to Australia. "It takes a while for foreign investors to get comfortable again, and I think we are seeing evidence of that now," he said. Several economists were puzzled by the result, which they said was due to a sharp improvement in the trade ledger. Imports fell 7 per cent cent, against a 2.7 per cent rise in exports. The chief economist at RBS, Kieran Davies, said the trade contribution of 2.2 percentage points to growth was the second biggest since World War II. "This was remarkable considering that demand in our trading partners was falling at the fastest rate since the 1930s," he said. SMH June 4, 2009 (edited) Back   Print this article