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Inflation could remain above three per cent until late 2009 because of solid commodity prices, Access Economics’ June Business Outlook warns.
Australia’s economy is also in a twin state of decline and growth, with states benefiting from the resources boom – such as Western Australia and Queensland – likely to power further ahead of non-commodity based states such as New South Wales and Victoria.
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“For half of Australia the glass is half full and for the other the glass is half empty,” Access Economics director Chris Richardson said.
“Although real output growth is slowing, nominal output growth is accelerating and looks like seeing the strongest gain in a generation as lingering strength in China... has underwritten an enormous surge in coal and iron ore prices,” Mr Richardson said.
The report also forecast another “rotten” year ahead for the finance sector as higher interest rates and the credit crunch take their toll.
