Strong Australian dollar to dent investment: report

09:22, October 28, 2010      

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Wage cost pressures and a strong Australian dollar are set to dent business investment, a leading economic forecaster said on Thursday.

According to a latest investment monitor report conducted by Access Economics, the mining sector is expected to be a victim of its own success, with the re-emergence of a skills shortage looming as an obstacle.

"With wages on the rise, higher construction costs may then threaten the viability of some investment projects," the report released on Thursday said.

Australian dollar once again came close to parity on Monday night at 99.48 U.S. cents.

As a strong Australian dollar edged closer to parity with the U. S. currency, other export-orientated sectors like tourism were also expected to struggle.

The Tasmanian economy, which relies on international tourism, was singled out as the region likely to suffer most from a resurgent local currency.

However, the report said Western Australia, where a renewed mining boom will keep the resources-rich state at the "top of the heap for some time".

The report said a pre-election mining tax compromise, negotiated between the government and the resources giants, was expected to help put business investment back on track across Australia.

Source: Xinhua


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