Economy set to return to boom times: Access Economics

Access Economics’ Chris Richardson predicts Australian economy will quickly return to the boom times of mid-2008

April 12, 2010

Access Economics’ Chris Richardson has predicted the Australian economy will quickly return to the boom times of mid-2008, easily outpacing the world’s recovery from the global economic crisis.

Richardson, speaking at last week’s 2010 Australian Trucking Convention, says that as the economy rebounds from the global recession, it is becoming clear Australians can expect a return to the heady days of the resource boom very quickly.

"A key question was always going to be just how Australia’s economy responded as interest rates wound back up and as government spending wound back down," he says.

"Recent developments have answered that question clearly – the current round of commodity price increases in coal and iron ore is so huge that Australia’s recovery will quickly go from modest to strong.

"The impact of a rapid return to resource boom-time conditions will wind back the clock less than two years to what it was like in Australia in mid-2008."

However, Richardson warns of a downside to the return to a resource-boom economy.

"While there are many advantages associated with a resource boom in which the world gives additional income to Australia on a platter, some negatives will also be well remembered," he says.

"The commodity price boom is less good news for the likes of NSW and Victoria than it is for WA and Queensland.

"Even WA and Queensland may see a return to the skills shortages and cost hikes which dogged those states during the last boom.

"In addition, the more the world pays for our commodities, the faster the Reserve Bank will be raising interest rates."

Richardson told delegates the trucking industry can expect an economic ‘mixed bag’ in the coming years.

"While the return to resource boom conditions will bring many benefits to the trucking industry – demand will be stronger not merely in resources, but in the economy in general – various costs and challenges are also worth noting," he says.

"For example, fuel prices will remain high, interest rate costs will rise further and competition from the resource and construction sectors – including for drivers – will increase the pace of wage increases."

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