Melbourne Institute Monthly Bulletin of Economic Trends April

Friday 18 April 2008

Report predicts slowing of economic activity

The latest issue of the Melbourne Institute Monthly Bulletin of Economic Trends shows that, for the rest of 2008 inflation will remain above the top-end of the RBA’s target band while economic growth will slow to 3.1 per cent by December 2008.

According to Professor Guay Lim, a member of the Applied Macroeconomics Team which compiled the Report, "State-wise, the two track economy will continue through 2008, but the gap in growth rates between Western Australian and Queensland, on the one hand and New South Wales and Victoria, on the other hand, is narrowing. The unemployment rates for New South Wales, Victoria and Queensland are also expected to stay at their current levels while the unemployment rate for Western Australia is predicted to rise marginally by December 2008."

The main risk to the Australian outlook continues to be the global economy. The US is now expected to dip into recession in 2008. Also, the current US credit crunch may worsen driven by potentially very large losses in the credit default swaps (CDS) market. On the upside, world commodity prices in general, and oil prices in particular have been rising strongly in recent quarters as reflected in the RBA commodity price index.

The latest Melbourne Institute Monthly Bulletin of Economic Trends report can be found at http://www.melbourneinstitute.com/research/macro/bulletin.html

Contact
Prof. Guay C. Lim
Melbourne Institute of Applied Economic and Social Research, The University of Melbourne
Phone : 03 8344 2146
Fax : 03 8344 2111
Email : g.lim@unimelb.edu.au

Media Contact
Mr Ordan Andreevski
Melbourne Institute of Applied Economic and Social Research, The University of Melbourne
Mobile : 0438 385 466
Fax : 03 8344 2111
Email : oan@unimelb.edu.au
Web : www.melbourneinstitute.com