Just as the dollar’s earlier surge weighed on economic growth last year, the drop back in the exchange rate this year will provide a boost to growth over the next 12 months. The pick-up in global economic growth will also help. Real export growth has already begun to accelerate and the survey evidence points to a further pick-up in the second half of this year. Business investment, which was the other key weakness last year, has also experienced a turnaround this year. Admittedly, with the crude oil price stalling, the rebound in mining investment already appears to have run its course. But with labour market conditions now unusually tight, firms will be forced to invest more in capital equipment.
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