Victoria is leading the way in an economic recovery with a surge of investment that has confounded all forecasts, providing strong signs that Australia is on the verge of a rebound.
Business investment rose 3.3 percent in the last three months, accounting for an astonishing 20 percent rise in Victoria, with private capital expenditure currently the highest on record, even after it’s adjusted for inflation.
The figures mean that economists are now upgrading their growth predictions, believing that Australia will emerge from the financial crisis without going into a technical recession – two quarters of contraction.
Forecasters had expected a collapse of investment of about 8 percent in June, and the federal budget had anticipated a collapse of 18.5 percent this financial year.
A spokesman for the Commonwealth Bank praised the Victorian recovery as the nail in the coffin of the Treasury’s forecast of an 8.5 percent unemployment rate.
”Investment has gone from being our Achilles heel to the best foot we can put forward,” he said.
Economist for ICAP Securities Adam Carr said that up until recently investment had been the weakest link in the Australian economic story.
”It’s not looking so weak any more, and this is during a period of significant uncertainty,” he declared. ”If the worst of the global financial crisis doesn’t induce a significant drop in investment, I don’t think a global recovery will.”
James McIntyre from the Commonwealth Bank said the prospect of the surge in investment being too strong, saying that it was coming as the impact of the Government’s infrastructure stimulus package is only beginning to be felt.
Thanks to The Age for the above quotes. For more information on this article visit their website.