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NEXT year is shaping up to be great for Australians, in spite of lower dollar against the US and higher petrol prices.
Economic growth is predicted to remain at a high 4 per cent; interest rates look like coming down and unemployment also should be at a new low.
The one cloud on the horizon is inflation. This should remain fairly stable but some fear it could edge up.
The Government predicts economic growth will reach 4 per cent for the fourth year in a row and faces the tantalising prospect of unemployment dipping below 6 per cent within a year, just in time for a late 2001 election.
Treasurer Peter Costello outlined an optimistic economic outlook with growth for 2000-01 revised up to 4 per cent from 3.75 per cent and employment predicted to increase by 3 per cent, up substantially from the Budget forecast of only 2.25 per cent.
Mr Costello said that if growth continued, Australia could have the lowest unemployment rate for 25 years by the end of next year.
"More people in work, more income tax, less unemployment benefits, the reduction in debt, less interest payments and a strengthening fiscal position as we continue the good work of economic reforms," Mr Costello said.
Home owners are tipped to get a break from interest rate rises and could even see them drop next year after the release of annual inflation figures.
Consumer prices increased 3.7 per cent in the first three months of the goods and services tax, bringing annual inflation to 6.1 per cent.
The figure prompted warnings of a wages push by unions but Prime Minister John Howard said income tax cuts were more than enough to compensate for price rises caused by the GST.
It was the highest rate since December 1990 but still far lower than most forecasts, including the Government's.
Strong economic growth would continue for the foreseeable future, pushing unemployment to less than 6 per cent by 2002, Treasurer Peter Costello predicted.
Launching an upbeat assessment of the economy, Mr Costello poured cold water on industry fears of recession.
Surging company profits and higher-than-expected GST revenue were adding billions to the GST bottom line, Mr Costello said.
Access Economics director Chris Richardson said on balance the revised Treasury estimates were "good news".
"The big picture is the economy is better, therefore the Budget is better," Mr Richardson said. But Mr Richardson said there were some ominous signs buried in the figures, including an upward revision in the ongoing inflation forecast, from 2.75 per cent to 3.25 per cent in year average terms.
That is just outside the Reserve Bank's interest rate comfort zone of 2-3 per cent and higher than markets have been expecting.
The review also shows government spending is expanding faster than predicted, while private spending is slowing down, another bad sign for inflation.
Mr Richardson said that would weigh heavily on the Reserve Bank's mind next year as it decided whether to raise interest rates again to control inflation.