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AUSTRALIA can look forward to two more years of strong economic growth thanks to the best global outlook in more than a decade, according to the latest Organisation for Economic Co-operation and Development report.
But the OECD is "assuming" that Australian interest rates will rise further in line with US rates, despite the protestations of the Federal Treasury that a tit-for-tat monetary policy was unnecessary and harmful.
The OECD said US official rates might have to rise above 7 per cent from current levels of 6.25 per cent in the next year or so to curb unsustainable domestic demand, overheated share prices and building inflation.
It is the global growth that underpins the positive forecast for Australia.
The OECD is expecting growth of 3.9 per cent this ear and 3.7 per cent in 2001, with exports "likely to be the major engine of growth".
That should see the current account deficit narrow and bring unemployment down to 6.4 per cent by 2001, although the OECD noted a need for "further structural progress" in the labour market to lower the jobless figure.