Australian growth forecast reduced to 2.7%

Australian economic growth forecast for 2008/09 has been reduced to 2.75% as the impact of the gas crisis ripples through the economy.

Federal Resources Minister Martin Ferguson said today that disruption to economic activity is expected as Western Australian companies layoff thousands of workers with mining and industrial companies forced to cut back production.

BHP Billiton has brought forward upgrades to its nickel refinery in Kambalda and diverted its gas allocation to keeping the Worsley Alumina refinery operating. The upgrade originally scheduled for mid 2009 is expect to take four months to complete. BHP has said that it will continue to accept ore from independent mining operators in the area inline with current contracts.

Economists expect continuing turbulence as mining companies come under pressure to continue to supply China's demand for materials from Western Australia, combined with growing inflation rising gold and commodity prices.