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Hope on horizon

THE economy hit a brick wall when the GST was introduced but looks set to improve by the end of the calendar year, according to Colonial First State Investment markets research head Hans Kunnen.

Speaking at a recent Securities Institute seminar on Australia’s economic outlook, Mr Kunnen said another big influence on the slow down had been the large increase in fuel prices.

An increase in petrol prices acts like a tax – it slows things down as people have less disposable income, he said.

But he said one thing that could contribute to keeping Australia moving was that it was an election year, almost right around the country.

He said election years often coincided with greater spending by Governments.

Mr Kunnen believes the world does not have to be too downcast about the United States economy because things would get better and it would still remain the biggest consumer in the world.

He said the US economy had been growing at the rate of 6 per cent a year, which was equivalent to adding an economy the size of Australia to the world every month.

BankWest chief economist Alan Langford said WA’s economy would remain soft until some of the resource projects went ahead, but with the Asian economies looking strong, investment into the resource sector should recover.

Business expectations for the June quarter remain just as bleak as the March quarter, with the Dun & Bradstreet national Business Expectations Survey showing just a 1 per cent rise in sales expectations for the period.

D&B economic con-sultant Duncan Iron-monger said it was now likely that both the March and June quarters would register negative results in actual sales.

“Non-durables manufacturing could be the exception, with a small rise in sales in the June quarter,” he said.

“If the expectations indexes have bottomed, they still have a long way to go to reach the strong positive numbers that prevailed throughout most of the eight years from 1992 to 1999.”

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