Economists warn the national accounts data due to be released today will show Australia's economy is too strong for its own good.
The September quarter national accounts, containing the all important gross domestic product (GDP) reading, will be released just hours after the Reserve Bank of Australia (RBA) announces if it has decided to lift interest rates.
Economists expect GDP accelerated 1.0 per cent in the three months to September, lifting the annual rate to a racy 4.8 per cent.
But it is widely forecast that the RBA will hold off any decision on rates until February.
Access Economics director Chris Richardson says the national accounts are the most comprehensive measure of how the Australian economy is going.
“It will give us essentially the good news that the Australian economy is growing fast, that we've been been picking up for a while and even though the drought remains a rotten one, the Australian economy is growing at speed,” he told ABC Radio.
But Mr Richardson warned the economy could be growing too fast.
“We have a problem of too much success at the moment – too much demand chasing around the Australian economy … our problem now is we are already at full stretch.”
Westpac senior economist Anthony Thompson agrees.
“We're expecting growth of 1.0 per cent for the quarter – that'd give you an annual rate getting close to five per cent now and that's clearly in our view beyond the long term speed limits of growth for our economy before you ignite inflation figures,” he told ABC Radio.
Dr Shane Oliver from AMP Capital Investors said there were other concerns too.
“Also just as worryingly the trade imbalance – in other words the gap between imports and exports – is running at about the worst it's ever been,” he told ABC radio.
Dr Oliver said the new Australian government should put its focus on tightening fiscal policy.
“I think the most important thing the new government can do on fiscal policy is look for savings,” he said.
“Obviously the government will be keen to fulfill their election promises but if they can find savings to reduce the amount of fiscal stimulus going into the economy, I think that would take a lot of pressure of the Reserve Bank.”
Labor's promised $31 billion in tax cuts should also be dumped, he said.
“In an ideal world it would be great not to have the tax cuts coming through but I think that we all realise that this is not an ideal world.”