ETF Trends
ETF Trends

The International Monetary Fund (IMF) likes Australia’s chances this year and in turn, boosted its previous forecast for expansion for the economy. Australia’s exchange traded fund (ETF) could grow on commodities demand from China, the fund says.

China should demand enough commodities from Australia to prompt more growth this year than was previously forecast. Jacob Greber for Bloomberg reports that the IMF says gross domestic product (GDP) will expand 2.5% in 2010 and 3% next year. [Why Asia’s health is affecting Australia.]

Enda Curren for The Wall Street Journal reports that an upswing in Australia’s economy is well under way. As a result, the Reserve Bank of Australia will focus on a likely build-up of inflationary pressures as demand outstrips supply in major sectors of the economy.

The consumer price index rose 0.5% in the fourth quarter from the previous quarter, slowing from a 1.0% rise in the third quarter. Strong data and healthy retail sales are a key point in whether or not the banks will raise the key lending rate another 0.25%, which is expected next week. [Read about other rate hikes here.]

One big worry if such a rate hike does come to pass is the impact it could have on consumers. Australia’s largest retailer, Woolworth’s, spoke out to say that 2010 will be “a challenging year” as the country balances consumer concerns and economic recovery, report Jacob Greber and Rob Fenner for Bloomberg.

For more stories about Australia, visit our Australia category.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.