economic growth to continue says expert...

Source: www.abc.net.au/business

Economic growth to continue, expert says
Last Update: Tuesday, January 30, 2007. 7:00am (AEDT)

A leading forecaster says Australia can expect stronger economic growth and a stay on interest rates in 2007.

Access Economics says interest rates do not need to go up this year after three hikes in 2006 and the unemployment rate will stay around its current 30-year low.

It is also predicting a boost to economic growth in the second half of 2007 on the back of the booming resources industry and a recovery in the farm sector.

Director Chris Richardson says 2007 will be another good year for the economy.

"We will have not merely lots of extra iron ore and coal and the like getting to market, but hopefully also a recovery among Australian farmers," he said.

"We're pretty much in the sweet spot of the cycle.

"Most of the good news is now happening, the bad news is a little further out."

Mr Richardson also says the housing market in the eastern states is unlikely to improve this year, and prices will start to fall in Western Australia.

But, he warns tax cuts in an election year will increase inflation and the chance of another interest rate rise.

Mr Richardson says interest rates should stay on hold and the Federal Government and Opposition could jeopardise this by promising more tax cuts in the next financial year.

"We've had a lot of tax cuts in Australia, we've had a lot of extra spending in recent years, in combination that has the Reserve Bank worried," he said.

"I don't think politics should descend into a competition for who has the biggest tax cut this year, it will simply disappear in a puff of interest rate smoke."


End.

Cheers, Pie