Economic Update

Date: 01/03/2011

Despite the effects of floods and cyclones, the Australian economy continues to be in good shape, but be prepared for a "stinker" of a May Budget.

After six months in the UK, our resident economist Professor Neville Norman comes back convinced that Australia remains a far better place to be in business, with the economic outlook for the rest of 2011 still positive. But he has words of warning about the May Budget: be prepared for a "stinker" - with spending cuts and tax increases making it one of the most conservative in recent times. That will help to keep a lid on further interest rate rises. Among other indicators, exchange rates will continue to be strong, reflecting the situation in the US; inflation is rising and activity growth should still reach two-and-a-half to three percent.