Once the post-election dust has finally settled, Australia's new Federal Government will have to deal with an economy that's heading into a slowdown. Economist Professor Neville Norman of Melbourne University says the global economy is still struggling, and domestic indicators - like plant and equipment investment - are not living up to the promise shown in the first half of the year. This means getting used to slower growth than was forecast, and the probability that the Federal Budget's return to surplus will be delayed by another year. For the new government, it also means maintaining some short-term stimulus in the economy and avoiding what he calls the major policy stuff-ups that afflicted the Rudd Government in its last year. Professor Norman still believes that interest rates will rise in the second half of 2010, but not as often or by as much as forecast earlier in the year.
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