Business will remain strong over next five years

In its latest report economic forecaster BIS Shrapnel says that business investment will remain at high levels for the next five years, driving growth in employment, income and spending. However they have also warned that higher interest rates would reduce the unprecedented level of investment in Australia for a brief period next year. Total business investment is forecast to grow by 10 per cent in 2007-08 to total $168.8 billion, but then ease by 1 per cent in 2008-09. While BIS Shrapnel expects that there will be another rate rise, possibly in the March quarter, there could be rate cuts in 2009.