Economy set to improve
INTEREST rates are on the way up, banks won't be loosening the purse strings for another two or three years and petrol prices will rise if the global economy continues to improve.
That was the word from National Australia Bank senior economist global markets research Spiros Papadopoulos, who addressed a Hervey Bay Chamber of Commerce breakfast in Urangan yesterday.
He also predicted that the high Australian dollar, which had impacted the tourism industry, was likely to remain in the US90c range for the next decade or so.
Mr Papadopoulos said Queensland's economy had been soft in the past couple of years with weak property markets and an ailing tourism industry, but would be back on track within three to five years thanks to a surge in business investment.
“Obviously a lot of that growth will be in mining and resource investment, but there will be spill-over effects into other industries support industries, service industries that support the mining sector and that should translate into higher retail and housing markets down the track,” he said.
But Mr Papadopoulos warned that the mining projects would suck up a lot of labour which would put upward pressure on wages and inflation causing the Reserve Bank to raise interest rates to keep inflation below 3 per cent. He predicted the Reserve Bank would raise the cash rate by 1 per cent to 5.5 per cent during the next year.
Mr Papadopoulos said banks would continue to be cautious about lending until asset values started clearly trending higher.
He said that was likely to be two or three years away when the US economy was going strong again, assuming actions by the Federal Reserve actually worked.
On the regional front, he said it was about trying to attract investment projects and create long-term employment opportunities with flow-on effects.
“If people can move to an area knowing there'll be ongoing employment opportunities rather than just one project and they have to move on elsewhere, that sustainability of employment over the longer term is what keeps a region going,” Mr Papadopoulos said.