3 Sep 2009

Australia to scale stimulus programme back

2:52 pm on 3 September 2009

The Australian government says it is now time to start scaling back its stimulus programme after the economy grew a larger-than-expected 0.6% in the three months to June.

Dubbed the 'Wonder from Down Under', Australia's economy is moving into its 19th successive year of expansion - in large part due to government handouts and tax breaks, which boosted household spending and business investment.

Federal Treasurer Wayne Swan is now promising to gradually withdraw the fiscal boost.

RBC economist Su-Lin Ong says his timing is right as the Reserve Bank is also signalling that interest rates are likely to rise.

She expects a rate rise before Christmas. It is currently 3%.

However, other economists warn there is a risk that spending has been brought forward, and the economy may continue to be weak with government support.