Australia not ditching commodities: FinMin

Despite the sharp plunge in commodity prices around the world, Australia's finance minister told CNBC that the economy was not ready to give up on a key pillar of the country's economic model – resources – altogether.

"The Australian economy is clearly an economy in transition from resource investment-driven growth to broader drivers of growth," Mathias Cormann told CNBC on Wednesday.

"(But) we're not diversifying away from resources. Part of the reason the economy continues to grow strongly is that our export volumes in terms of resources have actually increased very strongly and that is on the back of significant resource investment in recent years," he said.

Despite the sharp plunge in global commodity prices on the back of slowing demand from China, Australia's economy grew more than expected in the third quarter as a sharp increase in mining activity boosted net exports, data released in December showed.

Residential property along the harbourfront in Sydney.
Peter Parks | AFP | Getty Images
Residential property along the harbourfront in Sydney.

The economy grew 0.9 percent from the previous quarter, the Australian Bureau of Statistics said. The median forecast in a Reuters poll was for a 0.8 percent expansion. Year-on-year, the economy grew 2.3 percent.

Cormann said the country was in its 25th year of continuous growth.

"That is a great achievement for the Australian economy despite all the challenges with significantly lower prices for key commodities," he said.

The last GDP reading was an improvement for Australia's economy which has grown more modestly recently as a slowdown in China has curbed demand for Australia's commodity exports.

Cormann was confident that China's slowdown was not a problem for Australia.

"China will continue to be very important to the Australian economy...We understand what China is trying to achieve, it was always going to be difficult along the way from infrastructure investment driven growth to domestic consumption and services-driven growth," he said.

"Looking forward, as the global economic outlook changes as the demand in the global economy changes, we are nimble and agile enough to adjust and take advantage of the opportunities that present themselves to us."

-CNBC's Neelabh Chaturvedi contributed reporting to this story.

Clarification: This article has been updated since first published to clarify one of the minister's quotes.

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