Overall, Australia’s economic outlook remains strong. Callow forecasts a 3.5 percent year-over-year gross domestic product (GDP) reading in 2006, up from 2.5 percent in 2005.

“The pace into 2007 could accelerate to 4 percent or higher, bolstered by commodity exports, which could cut the trade deficit, and also from supportive fiscal policy and a resilient housing sector,” he explains.

The inflation picture has heated up with headline CPI posting a 3-percent year-over-year rise in the first quarter 2006.