Tuesday, 22 April 2008  
 
 
Australia is at a turning point. Over the next 12 months the economy will slow. As always there will be winners and losers but the good news for Queensland is that it will be one of the states that continues to perform very strongly said Tony Pearson, Deputy Chief Economist, ANZ at the Brisbane Chartered Accountants Business Forum today.  
 
“There is considerable concern about the impact of global developments on Australia. The world is in the midst of the most serious financial crisis since the Great Depression of the early 1930s, and global growth is expected to slow sharply in 2008”, said Mr Pearson.  
 
“Yet the international environment for Australia and especially Queensland will not be as dire as may be imagined. Australia is much more exposed to the performance of developing economies such as China and India, rather than to developed economies where the slowdown will be most marked,” continued Mr Pearson.  
 
Australia will enjoy another large increase in commodity export prices whereby steaming coal prices will more than double for the current bulk contract year, and coking coal prices are expected to triple delivering further massive income gains to Australia.  
 
“However the Australian economy will slow over the next 12 months, because the policy makers want it to. The problem for Australia has been that the economy has been growing too quickly, leading to rising inflation, a tight labour market and wages pressures. The desire to engineer a slowdown in growth lies behind the RBA’s aggressive interest rate increases since mid 2007,” said Mr Pearson.  
 
These disparate influences will have differing impacts on the state and territory economies.  
 
“Those states with a significant exposure to the mining industry will be protected to some extent from the domestic of higher interest rates. This means that Western Australia, Queensland and the Northern Territory should continue to perform strongly,” Mr Pearson said.  
 
“In contrast, those regions with only a small resources sector, and with industries predominantly focussed on domestic demand, will more acutely feel the cold wind slowdown,” concluded Mr Pearson.