Resources boom 'has put pressure on parts of the economy'

Tuesday 12 April 2011

Article by Mozo

The boom in the resources industry in Australia has given a boost to the economy as a whole but also added pressure on some sectors, it has been claimed.

Economy 'is strong but aspects are under pressure'

Don McGauchie, former Reserve Bank of Australia board member, explained that it has in part contributed to the increases in interest rates, reports the Australian.

He stated that when one sector is particularly strong, other areas struggle to get resources such as labour and money.

"If the labour market is being made more rigid, it is more difficult for those sectors that are going to have to adjust to higher interest rates," he commented.

Mr McGauchie added that these industries would also have to adjust to higher currency to achieve the necessary increases in productivity needed to remain competitive.

This comes after Treasurer Wayne Swan asserted that the nation has a strong economy and employment figures, the AAP recently reported.

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