Australia is set to continue its strong resources lead economic recovery, returning to levels of prosperity not seen since the beginning of 2008. At least for resource rich states like Queensland and Western Australia concludes the latest Business Outlook report from Access Economics.
Access Economics released their latest Business Outlook report into the Australian economy today, with Western Australia and Queensland set to grow at almost 3 percent this year, compared to only 2.3 percent in Victoria and 1.5 percent in NSW.
Access Economics spokesman Chris Richardson says the report indicated Australia is returning to a two-speed economy, with the resource states leaving behind the rest of the country.
“They are coming from a standing start – each of Western Australian and Queensland and the Northern Territory took a bigger hit through this downturn than most people realised,” Dr Richardson said.
“They were travelling faster than Australia – all three of them dropped to the point where they were travelling slower than Australia – and they do have to move a lot.” He said
The unfortunate consequence of the resource boom returning, is a return to the ‘two-speed economy’ seen leading up to the global financial crisis, with the Reserve Bank of Australia increasing interest rates to keep inflation down in booming resource states, but in doing so crippling the still recovering sections of the economy, hitting NSW particularly hard.
“It will re-establish the dividing lines in Australia’s two-speed economy, increasingly benefiting Western Australia and Queensland versus the other states,” Access Economics report read.
Wayne Swan was quick to caution against the optimism in the Access Economics report, with a return to growth not immediately paying dividends for Government tax revenues.
“As I’ve said before, very large losses accumulated by businesses in particular during the global recession will continue to drag on government revenues for some time to come,” Mr Swan said. “However, renewed resources boom conditions will boost the tax take in 2010-11, and that effect will build in 2011-12.”
“Treasury’s next two updates – the budget and the pre-election statement – will boost revenue projections as a result, and so public debt will peak well shy of current official projections.” Mr Swan said.