Courier Mail | By Fleur Anderson | July 17, 2002 GROWING investor distrust of the sharemarket could threaten Australia's "miracle economy" next year, according to a new survey.
Business confidence for the June quarter pointed to a strong and resilient economy but the Wall Street accounting scandals are expected to cloud the upbeat outlook, according to the National Australian Bank quarterly business survey.
A looming drought in parts of Australia could also derail prospects, NAB said. NAB slashed its Australian growth forecast for 2003 to 3.5 per cent from 4 per cent and down from 4.5 per cent for the June 2002 quarter.
But good news for consumers was wages and price pressures were fairly subdued, suggesting another interest rate rise in August would be unnecessary.
Despite countless dire predictions, housing construction continued to defy expectations of a slowdown.
Australia's voracious appetite for new houses and the goods to fill them should continue into early 2003, feeding the retail, wholesale and residential housing sectors.
However, NAB chief economist Alan Oster said housing investment should fall from late 2002.
Rural and farming communities were preparing for tough times ahead of an expected drought, which could devastate farm incomes. Even a "moderate" drought would slash farm income by 40 per cent.
Many farmers, particularly in Queensland and northern NSW, will not plant crops this year to preserve savings.
NAB estimated a drought would drag production down about 5 per cent.
Across the states, Queensland, Western Australia and Tasmania showed the greatest improvements in business conditions in the June quarter.
Businesses exposed to the global market, including mining, agribusiness and some manufacturers, experienced weaker conditions.
Almost all of businesses surveyed expected interest rates to rise further. Most expected rates to rise another 1.3 per cent.
NAB expects rates to climb to 5.5 per cent by the end of 2003 with unemployment falling to 5.75 per cent.
Many economists believe business investment will drive the economy in 2003 when housing slows.
If US sharemarket problems infected Australia, Macquarie Bank senior economist Brian Redican said businesses would find raising investment funding difficult. NAB expects the Aussie dollar to rise to US58 by the end of this financial year. While bad news for exporters, this will be a boon for importers.
According to Australian Bureau of Statistics data released yesterday, Australia's imports fell more than 5 per cent to $9.63 billion in June from $10.1 billion in May.
However, Commonwealth Bank senior economist Michael Blythe said on a seasonally adjusted basis, imports rose 3 per cent and pointed to an ever-increasing trade deficit.
He said the deficit in June was likely to reach $900 million from $623 million in May.Courier Mail:
