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Interest Rates: Rise Will Hurt Local Business
26 Jul 06 - Interest Rates: Rise Will Hurt Local Business. The Illawarra Business Chamber said an interest rate rise aimed at cooling down the over-heating resource States will do significant damage to the NSW economy which has been flat-lining for a year.
“Of the last three quarters, NSW has only recorded one quarter of positive growth. During the last quarter, NSW had in fact zero economic growth”, said Mark Grimson, Chief Executive of the Illawarra Business Chamber.
“We have a two-laned national economy with a fast lane and a slow lane. An interest rate rise is akin to throwing tacks across the roadway of the slow lane.
“NSW has been the only State over the last year that has not seen employment grow and it is the slowest growing State in Australia.
“NSW is facing drought, a rising currency that is hitting NSW’s traditional exports of services and manufacturing, a downturn in the property market, zero growth, petrol price increases and potentially, another interest rate increase.
“The State is lagging the rest of Australia and at the same time NSW is the most vulnerable to receiving a shock from an increase in interest rates, given the higher debt exposure of NSW households.
Mr Grimson said it was beholden on the Reserve Bank, if it decides to increase the official interest rates, to fully acknowledge the impact on what is Australia’s largest State economy.
“I understand the dangers of inflation and the important role that the RBA has in keeping it in check. The challenge for the RBA will be to keep inflation in check without pushing the NSW economy to the brink.
For more information contact Mark Grimson on 02 4229 4722 or 0409 155 240
Release date: 27/07/06
