THE next economic boom could be here as soon as 2014 according to one chief economist, recently addressing a business leaders’ luncheon in Brisbane.
Some of Queensland’s top ASX company CEOs were in attendance as BIS Shrapnel economist Frank Gelber (pictured) predicted growth in ailing sectors including property and retail.
“Two years from September we will be absolutely, bloody booming,” says Gelber.
“A lot of people are employed through the mining sector including software suppliers and business services firms that are still not getting enough work. However, in the next few years, they will be running ragged.
“Investment in Queensland property will be a primary driver of growth and go off the scale. House prices are set to rise 20 per cent in the next three years. Hang onto your hats, it will be a wild ride.”
However, businesses should not expect to cope with the upturn by simply working staff harder.
“There was zero-growth in employment during the past year. We can use existing workers for a while, but eventually companies will need to hire more people,” he says.
“The Reserve Bank of Australia predicts staff capacity constraint issues will arise in two years from now. We will have to move away from cost-cutting and maximising savings to cater for growth.”
The firm predicts this investment will help reduce national unemployment from 5.2 to 4 per cent by the year 2013. This is likely to lift interest rates to 8.2 per cent and boost retail turnover from 0.7 to 3.1 per cent by 2014.
Gelber believes there also needs to be some positive thinking and the frugal corporate culture acquired during the summer of disasters and downturn must be cast away. He says tourism will take longer to recover as operators do not offer good ‘value for money’.
“We are not investing enough for moderate growth. We are not spending money where we need to,” he says.
“We are not building enough hotels and room rates are high, preventing us from becoming a good value-for-money destination.”
He agrees with the US that the value of China’s currency should be raised.
“The RMB is undervalued and it is not only holding back China but also the US and Europe,” he says.
“Never underestimate currency in terms of what it produces. I lament the loss of Australian industry; we will keep losing our industry due to the high dollar.”
Gelber also suggests Australia should adopt a past strategy employed by North America to counter the rise of Japanese manufacturing to strengthen exports.
“The US restored its manufacturing powerhouse status in the 1980s, because the US dollar fell and the (Japanese) Yen rose,” he says.