Australia's economy has been clouded with negative forecasts in recent weeks with some even warning of a dip back into recession, but a recent report argues the economy is poised for a rapid acceleration in the coming months.
According to Clifford Bennett, chief economist of the financial services firm White Crane Group, which publishes the White Crane Report, Australia is set for a major domestic boom next year with gross domestic product growth estimated at 4.5 percent – levels not seen since before the financial crisis – supported by a big wave of investment expected after the Federal election in September.
"We were one of the first to warn of this slowdown in the domestic economy some two to three years ago, and it appears we are now among the first to recognize there will be a major domestic economic boom next year, as well as an on-going resources boom," he said.
Australia's economy has held up relatively well since the financial crisis but in recent times, some economists have turned bearish on its prospects. An excessively strong domestic currency, speculation over a peak in mining investment and a slowdown in demand from major trading partner China, have all raised concerns.
As a result, major investment banks including Bank of America Merrill Lynch and Goldman Sachs have recently moved to downgrade their forecasts for Australian growth next year, to 2.4 percent from 2.9 percent, and to 1.9 percent from 2.7 percent, respectively.
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But Bennett is adamant the more negative forecasters have falsely interpreted the end of the mining boom and are under-estimating the positive impact that the Federal election outcome on September 14 will bring.
The hotly contested election could give victory to the opposition - the Liberal/National Coalition party led by Tony Abbott - and see the exit of the current ruling Labor party led by Prime Minister Julia Gillard, which has fallen out of favor especially with business voters due to the deeply unpopular and controversial mining tax introduced in recent years.
According to Bennett, many are holding back on investment pending the outcome of the election.
"They [other economists] really do not seem to get that the resources boom is not over, and the Australian businesses are hording cash waiting to invest on a Coalition win," said Bennett.
"We are further encouraged that the Australian economy will accelerate sharply within months. This will be a rare acceleration historically," said Bennett.