The release of the national accounts by the Australian Bureau of Statistics on Wednesday saw gross domestic product grow 2.4% in 2016, the strongest result in four years, after strong surges in the mining, agriculture, forestry and fishing industries
The Bank of Melbourne’s chief economist, Besa Deda, said the expansion looked set to continue throughout 2017.
“Resources exports and infrastructure spending should also assist economic activity,” she said.
“Low interest rates, a weaker Australian dollar helping the services sectors and still firm population growth will also provide underlying support.”
The Royal Bank of Canada said the results had only offered gains for certain sectors of the economy.
“The gains in national income are very much skewed towards corporates,” said the bank’s head of Australian strategy, Su-Lin Ong. “This is consistent with our view that the gains in the upswing are far more narrow that the last cycle.”
While some of the extra revenue would take a while to flow through to taxable profits because of the “rain shadow” of earlier losses, the budget should start looking better in 2017-2018 and look a lot better by 2020-2021 depending on the assumptions that were made about how long the high mineral prices would last.