The Australian economy has performed better than expected due to the federal government’s fiscal stimulus, the drastic cuts to interest rates and continued strong demand by China and other emerging economies for our resources. These have combined to ensure that the Australian economy remains resilient.

Economic growth forecasts for 2009-10 and 2010-11 have been revised upwards and now range from 1.5% to 2.25% and 2.75% to 3.25%. The economic outlook for the printing industry is expected to be modest.

Inflation is expected to remain moderate, ranging between 2.25% and 2.5% during financial years 2009-10 and 2010-11.

Printing businesses should thus be prepared for cost adjustments of less than 2.5%.

With labour market conditions forecast to ease, wage rises are projected to remain modest and range between 3.25% and 3.5% during the 2009-10 and 2010-11 financial years.

Printing businesses that pursue further automation opportunities will be able to reduce labour costs. Those who don’t should budget for wage increases of up to 3.5%.

Capital expenditure in the economy is expected to contract initially by 6.5% during 2009-10, before registering a modest increase of 5.5% during 2010-11. With the federal government’s investment rebate ending and the existence of idle capacity, new capital expenditure in the printing industry should be flat during 2010.

The exchange rate relative to the US dollar is expected to remain high during 2010 due to ongoing strong demand for Australian resources and relatively higher cash rates in Australia.

Printing businesses engaged in exports will become less competitive. Most of the printing industry will, however, benefit from reduced costs of imported raw materials and capital equipment.

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