A prominent economist says a strong global economy is doing Australia a huge favour but low interest rates have left families stretched, with consumers to provide less support to growth this year and next.
"Australia's outlook remains good but seems likely to fall shy of being great," Deloitte Access Economics economist Chris Richardson said in his latest quarterly business report, released on Monday.
He says growth is excellent throughout the globe while the risk of a global trade war is "pretty small" at this stage, which is good news for Australia.
The huge falls in domestic mining-related construction have now passed and the long-awaited pick-up in wage gains is beginning.
"The backdrop is great and that's one reason why investment is now on an upswing," Mr Richardson says.
But he said Australia sandbagged the economy from a sharper slowdown in recent years by cutting interest rates to the bone.
"That has left our consumers stretched and housing prices silly - which suggests consumers and homebuilding will, therefore, provide less support to growth in 2018 and 2919 as they did in 2016 and 2017."
He does not expect the Reserve Bank to raise the cash rate until early 2019, an increase he expects to be well flagged by the central bank for fear of spooking Australian families who are "up to their eyeballs in debt".
He said inflation pressures are not a short-term threat in Australia which is leaving the Reserve Bank with time on its side.
The cash rate has been unchanged at a record-low 1.5 per cent since August 2016.
March quarter inflation figures are due on Tuesday.
Economists expect the consumer price index to grow by 0.5 per cent in the quarter, keeping the annual rate at 1.9 per cent and just below the central bank's two to three per cent target band.
The more interest-rate sensitive measures of underlying inflation - which smooth out volatile price swings - are also expected to be running at an average rate of 1.9 per cent.
