- April 28, 2010
- Posted by: admin
- Category: Finance News
The business outlook by economic forecaster Access Economics suggests Australia is heading back to the same economic position as mid-2008, with the recovery riding on the back of increased demand for key commodities.
Resource-rich areas such as Western Australia, Queensland and the Northern Territory will benefit, partly because their customers are in emerging nations, which have returned to growth much faster than the developed world.
But the forecast suggests it will take time for the sector to catch up with demand.
Access Economics director Chris Richardson says the boom will return Australia to a two-speed economy.
“The big price increases for coal and iron ore won in the last month or two do mean that Australian incomes are about to surge in a way that we haven’t seen since 2007,” he said.
“In fact, in many ways towards the end of this year and 2011 will be very familiar. It will be deja vu all over again.
“As particular commodity prices – coal and iron ore – take off again, that pushes the exchange rate.
“It will drive interest rates up further and perhaps they will go beyond the normal that people have been expecting.”
Mr Richardson also tips unemployment will fall below 5 per cent.
The Access Economics report says the New South Wales economy is showing signs of a genuine recovery but may not be entirely out of the woods.
It points to growth in housing activity, retail spending and a strengthening jobs market, but warns rising interest rates and a weak commercial construction sector could cause economic headwinds.
New South Wales Treasurer Eric Roozendaal says he is confident of sustained growth.
“All the strong indicators – retail sales, construction activity, housing sector, new cars – we are seeing all the green shoots of recovery that we’ve talked about,” he said.
“I believe New South Wales will lead the nation through the recovery stage post the global financial crisis.”
SOURCE: ABC News