AUSTRALIA'S economic recovery this year will be ''mild not wild'', as rising inflation and interest rates keep household spending in check, according to Access Economics.
Although recent figures suggest the economy ended 2009 with a bang, the forecaster says the bounce-back from the global financial crisis would be much weaker than after previous recessions.
Economic growth this financial year would be 1.6 per cent, rising to 3.2 per cent in 2010-11, Access said. This is well below the 5 per cent growth after recessions in the '80s and '90s, when sharper downturns left more scope for recovery.
''The globe may already be recovering, but it isn't about to experience the usual Lazarus-like recoveries seen in the wake of recessions past,'' Access said in its Business Outlook, published today.
Employment growth would also be slow in the first half of the year, it predicted.
Despite the subdued performance, Access said, inflation would soon appear, thanks to ''relentless'' rises in rents and the cost of electricity and health care.
The inflation rate would creep up towards the higher end of the Reserve Bank's comfort zone between 2 and 3 per cent, forcing it to raise interest rates to between 5 per cent and 5.5 per cent by next year, Access said.
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