Overall, the economic outlook has been improving for Australia. Ideaglobal’s Sofat forecasts an Australian 2007 gross domestic product (GDP) reading of 3.3 percent vs. 2006’s 2.7 percent reading. “The main driver of growth remains investment and personal consumption expenditure,” Sofat says. Ruth Stroppiana, director of Asia Pacific Economics at Moody’s Economy.com, adds, “Business investment has been a key driver of the Aussie economy in recent years as mining companies have poured money into plants and machinery in order to increase production and take advantage of the global commodity boom.”
Stroppiana forecasts Australian GDP growth at 3.1 percent in 2007. “While export prices have soared, helping to drive Aussie terms of trade to 50-year highs, export volumes have been somewhat sluggish, restricted by numerous capacity constraints and infrastructure bottlenecks,” she says. “In the opening months of the year, Aussie exporters continued to struggle to increase outbound shipments. Australia’s exporters are also battling a higher currency.”
Ideaglobal’s Sofat agrees. “The key will be whether we get the much awaited boost in export volumes so that the external sector starts making a sizeable contribution to economic expansion,” she says.
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