Australia’s economy is predicted to continue on its upswing over the coming years, leading to a boom later this decade. With the BIS Shrapnel Long Term Forecasts update reporting Australia is in the recovery phase after what has been a relatively modest downturn.
Unfortunately though, as a result of this renewed growth phase, interest rates are predicted to rise considerably over this period as inflationary pressures grow.
“We are now well and truly into recovery from what turned out to be a modest downturn,” said BIS Shrapnel economist Richard Robinson. “Investment, and primarily the construction side of it, is the primary driver of growth in the economy.”
“Growth will pick up speed over the next two years and build into a boom later this decade, driven by rolling investment cycles,” Said the report.
Initially housing construction will fuel growth, then shifting to resource exports over the long term as key projects come back online to supply international demand.
“From 2010, housing construction will take over from waning public spending as the key driver of growth,” Mr Robinson said.
“Initially spurred on by a combination of first home owner/builder grants and low interest rates, this upswing will gather momentum into a boom by 2012.”
“There’s a whole raft of mining projects that will get resurrected, if not now, then next year,” he said.
“It’s the investment phase that will really boost jobs, more so than the actual exports.”