- James Glenn, NAB economist
Australia's business confidence jumped to the highest level since the election of Prime Minister Tony Abbott's government in September 2013 as post-budget boost to confidence appears to be mounting. The National Australia Bank confidence barometer gained two points in June to 10 index points. After a politically disastrous 2014 budget that pushed confidence lower, the Abbott government proposed tax cuts and write-offs for small firms in May to boost sentiment. Companies have also benefited from all-time low interest rates at 2%, as well as currency trading at around 74 US cents. The Australian Dollar has fallen from above parity with the US Dollar in 2013, to around 74 US cents recently, a level, which is believed to be its fair value by some currency strategists.
The South Pacific economy has been struggling with the fallout from the waning of a decade-long mining investment boom that supported growth, and the relatively high Aussie Dollar that hurt exporters. However, recent data shows the economy appeared to be more resilient than expected, with GDP growth recording a healthy 0.9% in the beginning of 2015. While some sectors including mining are likely to be struggling for a while, business activity in other industries such as construction are likely to continue to accelerate due to extreme loose policy stance.
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