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Australia's Economy Grows Strongly in First Quarter

The Australian economy has grown strongly in the first quarter of this year, and New Zealand's central bank has announced a surprise interest rate increase. Claudia Blume in Hong Kong has more on these and other business stories from the Asia-Pacific region.

Australia's economy grew 3.8 percent in the first quarter through March, compared to a year earlier. Strong household spending, the construction sector and a booming mining industry contributed to the country's strongest growth in three years. The economy expanded despite a more than 20 percent drop in farm production, caused by the worst drought in Australia in a century.

In another piece of good news, Australia's unemployment rate dropped to 4.2 percent in May, the lowest level in more than 30 years. Speaking on Australia's ABC radio, Prime Minister John Howard happily took credit for the good news.

"There's no better thing a government can do than to run an economy so that people who want work can get it, and we are closer to full employment in Australia now than we have been at any time in the last 30-35 years," he said. "And it is a wonderful result."

In neighboring New Zealand, the central bank caught the markets by surprise by raising its key interest rate a quarter of a percentage point to eight percent, one of the highest rates in the developed world. The bank said the rate rise, the third this year, was aimed at curbing inflation.

Japanese carmaker Toyota says it has now sold more than one million of its hybrid cars worldwide since it first introduced them 10 years ago. Hybrids, which run on both gas and electricity, emit fewer pollutants and greenhouse gases than traditional cars. Toyota launched the world's first hybrid, called the Prius, in Japan in 1997.

And Danone, the French dairy and beverage maker, has filed a lawsuit against businesses linked to Zong Qinghou, with whom Danone formed a Chinese joint venture to manufacture and sell beverages in China.

Zong owns Hangzhou Wahaha Food & Beverage, one of China's largest beverage makers, and one of Danone's partners in the joint venture. Danone alleges that Hangzhou Wahaha has illegally copied water and fruit juices made by the joint venture, and is selling them under Wahaha's own label.

Danone, whose products include yogurt and Evian mineral water, says it is losing $25 million a month as a result.

The lawsuit was filed in the United States, and seeks damages from companies belonging to Zong and from other shareholders. Zong has since resigned as chairman of the joint venture. He says Danone "does not understand the Chinese market and culture."