Resource projects dig us out of a hole
By Mathew Murphy | smh.com.au | 19 November
Australia's economic growth is expected to track well above long-term trends, buoyed by record capital expenditure in resources projects.
The Westpac-Melbourne Institute leading index, which measures the pace of economic activity three to nine months into the future, puts Australia's annualised growth rate at 5.8 per cent in September, significantly higher than the average trend of 3.1 per cent.
Westpac's chief economist, Bill Evans, said growth had accelerated from -5.4 per cent in May to its present level of 5.8 per cent.
"That is the fastest turnaround in the growth rate of the leading index since the economy bounced out of recession in the mid-1970s," he said.
"The sharp recovery in the leading index's growth rate supports our view that the Australian economy is moving into a stronger growth trajectory in 2010.
We expect growth to pick up from 1.75 per cent in 2009 to 4 per cent in 2010. That compares to the Reserve Bank's more conservative forecast of 3.25 per cent in 2010."
The Federal Government's own commodities forecaster, ABARE, said the value of resources projects, including the $43 billion Gorgon liquefied natural gas project, was providing the economy with a shot in the arm.
Planned capital expenditure for 74 resources projects as of October reached a record $112.5 billion, an increase of 40 per cent from April.
First published by Smh.com.au on November 19 2009
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