Australian economic growth slows to 2.7pc

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SYDNEY, Sept 3 (AFP) Australia's economy grew at its slowest pace in almost four years in the three months to June, official data showed today, but Treasurer Wayne Swan said it was still performing solidly. brGrowth was 0.3 per cent over the previous quarter, with the annual rate falling to 2.7 per cent, the figures showed after the central bank Tuesday cut interest rates for the first time since 2001. brBut Swan said high Asian commodity demand, led by China, had left the resource-rich Australian economy better placed to battle the global slowdown compared with some other countries. brThese are solid numbers, especially considering global challenges that we are facing and what is happening elsewhere in the developed world, he told reporters. brThe global credit crunch and the global oil shock have buffeted confidence in share markets around the world and are slowing global growth, he said. brThe Reserve Bank of Australia (RBA) Tuesday cut interest rates by 25 basis points to seven per cent because of cooling economic growth. The decision ended a long spate of hikes aimed at taming inflation. brThe latest growth data compare with a revised 0.7 per cent quarterly expansion in the first three months of the year, when the annual growth rate stood at 3.7 per cent. brEconomists said the economic slowdown justified the central bank's decision to push down rates, but was not deep enough to spark similar action next month. brIt certainly validates the rate cut yesterday (Tuesday), there is scope there to take the foot off the brake, Commonwealth Bank chief economist Michael Blythe told Dow Jones Newswires. brBut he said while the growth figures were weaker, the economy hasn't stopped and there are still some inflation issues here, which again you can see in the numbers. brAustralian inflation is running at annual rate of about 4.5 per cent, above the central bank's target of 2.0 to 3.0 per cent. But the bank expects inflation will fall back to target by 2010. brFuel costs had risen, household spending had been subdued and there were indications of a softening in business activity, with overall economic growth set to be slower, central bank governor Glenn Stevens said yesterday. brUnlike Australia, the developed economies of Japan, the Eurozone and Britain all face the risk of recession following a global credit crunch sparked by a US financial crisis.