"Mining boom and low rates key to our strength"

Hi Followers

I came across this today, not directly real estate related but thought it was a good article and read about what does determine the property market...the economy!

THE workforce may be shrinking, but Australia is on track to notch its 21st consecutive year without a recession, according to a report by global bank HSBC.

The bank's chief Australian economist, Paul Bloxham, says the strength of the mining boom coupled with likely forthcoming interest-rate cuts will stimulate the economy, ensuring it continues to grow.

Much of the investment in the mining industry was "baked in" and could not be unwound, ensuring the sector contributes about two-thirds of the nation's economic growth this year.

HSBC is forecasting growth in gross domestic product to clock in at 3.4 per cent.
But significant challenges were nonetheless in store, Mr Bloxham said.

China's economic health was "the elephant in the room" for Australia, the report says.
The nation will also have to contend with weak productivity growth, a Federal Government deficit and the continuing trend for households to cut their debts, which will all "test Australia's luck", it says.

But the economy is well placed to weather the storm.

"Given the low level of government debt, a fiscal response to a sharper-than-expected global downturn could also be implemented if necessary, although the government would be forced to concede its political imperative to return to a surplus by 2012-13," the report says.

The report comes after the World Bank this week cut its forecast for global growth this year.

This information was gathered from:
http://www.perthnow.com.au/business/mining-boom-and-low-rates-key-to-australias-strength/story-e6frg2r3-1226249168309

DEB BRADY
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