Economic growth to pick up in 2014 - RBA
AUSTRALIA'S economic growth is expected to pick up pace in the coming years, thanks to stronger activity in the non-mining sectors, the RBA says.
AUSTRALIA'S economic growth is expected to pick up pace this year thanks to a lower exchange rate and stronger activity in the housing and retail sectors, according to the latest forecasts from the Reserve Bank of Australia.
Investment in the mining and resources sector is forecast to peak some time this year and a pick up in the non-mining sectors of the economy is needed to maintain economic growth.
"Until recently, survey measure of current business conditions have been below average, consistent with subdued non-mining investment," the RBA said in its quarterly statement on monetary policy.
"A number of indicators, however suggest a gradual increase in growth over time."
"The depreciation of the exchange rate should provide some additional impetus to activity in the traded sectors of the economy," the RBA said.
The bank said that business conditions improved in the latter part of 2013.
"Retail sales and the Bank's liaison point to a pick up in household consumption growth in the December quarter and measures of consumer sentiment remain a little above average levels," the RBA said on Friday.
"Leading indicators suggest that dwelling investment is likely to have increased in the (December) quarter and will grow further over the coming months."
After its board meeting on Tuesday, the RBA kept the cash rate unchanged, highlighting the improved economic growth outlook and flagged the end of the rate cutting cycle that has seen the cash rate fall to 2.5 per cent, from 4.75 per cent in November 2010.
"On present indications, the most prudent course is likely to be a period of stability in interest rates," RBA governor Glenn Stevens said in a statement accompanying the decision on Tuesday.
The RBA reiterated that comment in the statement on Friday.
In its latest forecasts the RBA revised its economic growth forecast for the year to December 2014 to between 2.25 per cent and 3.25 per cent, up from the two to three per cent forecast in the November Statement on Monetary policy.
The central bank also increased all its other forecasts for the coming few years by a quarter of a percentage point.
"Growth is thought likely to strengthen a little in 2014, though to a pace that is still a little below trend," the RBA said.
"It is then expected to pick up further to an above-trend pace by 2015/16."
The RBA said this was primarily due to the lower Australian dollar, which is expected to boost export and restrain imports.
The bank acknowledged that economic growth to the year ahead will continue to be restrained by the "substantial fall in mining investment and planned fiscal restraint" by state and federal governments.
"At the same time, low interest rates are stimulating prices and turnover in the established housing market."
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