The surging Australian dollar has lifted the growth outlook for the nation's economy in 2004, but the gains could dampen economic prospects for 2005, private forecaster Access Economics said on Monday.
The two percent appreciation of the Australian dollar since January 1 had given the 2004 outlook a second wind because it would boost retail, through lower import prices, and keep a lid on interest rates, the Canberra-based forecaster said.
"This second wind in the 2004 outlook may be coming at the expense of 2005 growth," Access said in its Business Outlook.
Access revised its forecast for gross domestic product growth (GDP) in 2004 up to 3.7 percent, from a previous forecast of 2.9 percent, but 2005 GDP growth has been revised down to 1.7 percent from 2.3 percent.
Access said interest rates were likely to rise to 5.5 percent, but would remain there because the Reserve Bank was likely to be constrained by the effect of the strong Australia dollar on inflation and a likely national election this year.
It said the Australian dollar could hit 80 US cents again this year as a result of inaction on the US budget deficit and US rates and good gains in world commodity prices, and that Australian inflation was heading below two percent for 2004.
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