Fed: Costello says Aust economy solid but world still a worry
By Jim Hanna, Economics Correspondent
CANBERRA, April 4 AAP - Australia's economy was solid, but there was no room for exuberancebecause the world economy was still difficult, Treasurer Peter Costello said today.
Mr Costello was speaking after official figures showed retail spending edging up forthe ninth month in a row in February.
Allowing for seasonal impacts, retail trade climbed 0.3 per cent to $14.12 billionand was up 7.1 per cent for the year, the Australian Bureau of Statistics said.
"It's solid, not runaway ... and it's consistent with an economy growing in a solidway," Mr Costello told reporters.
"There is a lot of consumer confidence in the Australian economy supported by low interestrates and low tax rates.
"But the international environment is still a very sticky one ... (and) will take considerablecare in economic management over the next 12 months."
Mr Costello criticised media commentary that suggested the economy bounced back toostrongly and needed an interest rate rise to bring it under control.
"Over recent months (the commentary) has swung from the pendulum of despair to thependulum of exuberance in a very short space of time."
Japan, Europe and the United States were still very weak, he warned.
"There's been a tendency in recent days to engage in some irrational exuberance inrelation to the economy," he said.
"But this is still a difficult world environment and anybody who thinks it's sunnyuplands all the way home from now on would be mistaken."
Mr Costello denied his comments were a signal to the Reserve Bank of Australia thatit should not raise interest rates.
"I haven't been commenting on interest rates," he said.
"No, I comment on the economy because I'm the treasurer of Australia, that's part ofmy job," he said.
Mr Costello also said rising oil prices, a potential by-product of the Middle Eastcrisis, could hurt the economy.
"The worst thing about the Middle East is the killing and the carnage," he said.
"A secondary consideration is the economic fallout.
"We learnt in 2001 that rising oil prices dampen consumer sentiment and slows growth,and contributes to a world slowdown.
"You've got to remember that rising oil prices are not good for economic growth.
"We prefer to see a more stable, moderate oil price."
AAP jph/daw/ns/de
KEYWORD: ECONOMY LEAD
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