Australian Economy to Boom Later This Decade, BIS Shrapnel Says

Feb. 23 (Bloomberg) -- Australia’s economy will accelerate over the next two years before building “into a boom” amid a surge in business investment, BIS Shrapnel Ltd. said.

Gross domestic product will rise 2.7 percent in the 12 months through June 2010, 3 percent in fiscal 2011 and 3.8 percent the following two years, the Sydney-based forecaster said today.

A surge in house construction and government investment in infrastructure such as schools and roads will help stoke economic growth, BIS Shrapnel predicts. Inflationary pressures, leading to higher interest rates, will increase in three to four years as a mining expansion intensifies.

“We are now well and truly into recovery from what turned out to be a modest downturn,” said BIS Shrapnel economist Richard Robinson. “Investment, and primarily the construction side of it, is the primary driver of growth in the economy.”

“Growth will pick up speed over the next two years and build into a boom later this decade,” the BIS Shrapnel report said.