A rise in interest rates could have extreme effects on the recovering Australian economy, a peak business group says.
The Australian Chamber of Commerce and Industry's (ACCI) quarterly
Survey of Investor Confidence report shows the strength of the economic recovery is beginning to slow.
The rising dollar, poor outlook for the farm sector and international stability are factors shadowing a continuing economic rise, with predicted rate rises stifling activity, chief executive Peter Hendy says.
"The data show that an incredible 98.7% of respondents believe that interest rates will continue to rise. Their reaction has been to reduce their own level of activity," he says.
"The economy continues to move forward but there are now signs that the strength we had become accustomed to is beginning to diminish."
The
survey found business conditions have fallen from 59.5 points to 56.9 and the level of sales has fallen from 58.6 to 56.9.
"Looking at the situation within their own firms, almost half of the respondents indicate that conditions remain better than satisfactory," Hendy says.
"The national economy continues to be seen as on the mend, the climate for investment is still seen as reasonable.
"[However], there are indications across the entire data set of a slightly less robust economy than we had come to expect."