By Greg Ansley
CANBERRA - Some of the steam is expected to escape from Australia's surging economy as it nears a peak that could push growth to 4.75 per cent for 1998-99.
The National Australia Bank has also warned of risks for an over-pumped Australian dollar and of a worsening current account
deficit.
But with forward orders and capacity utilisation running at high levels, strong domestic demand and improving global prospects, the bank expects Australian growth to approach a still-robust 3 per cent in 1999-2000.
Demand is also expected to push job creation over the coming year, possibly driving unemployment well below 7 per cent in the next six months.
The bank's latest quarterly business survey said the main inhibitors on growth into and through 2000 would include slowdowns in dwellings, business investment and the stock cycle as infrastructure spending eased and Australia's $A10 billion corporate Y2K programmes came to an end.
Further effects could come from the acceleration of housing and consumption expenditure to beat the introduction of a GST in July next year.
The bank said stronger domestic demand was likely to hit Australia's external balance.
Stronger global growth was not fast enough to substantially increase commodity prices in the next six to nine months, with the terms of trade remaining flat.
The bank predicted a current account deficit of about $A39 billion - 6.25 per cent of gdp - in 1999-2000.
It said that while an improving global outlook was positive for the Australian dollar, the market had run a good way ahead of fundamentals.
"It is clear fund managers have taken a view that the next global growth surprise will be on the upside and have positioned themselves for this," the bank said.
It said the value of the Australian dollar was closer to 62USc than 66USc, posing potential risks to the currency.
