Business investment to help lift growth

Colin Brinsden, AAP Economics Correspondent

New business investment figures will help gauge the well being of the Australian economy heading into next week's national accounts.

The OECD in its latest Economic Outlook expects a pick-up in business investment will help boost economic growth.

Economists expect Thursday's data will show capital expenditure by private businesses grew by one per cent in the first three months of 2018, results that will feed into next Wednesday's national accounts for the March quarter.

At this stage, economists are forecasting the economy expanded by a solid 0.8 per cent in the quarter to 2.7 per cent annually.

Like the Turnbull government, the OECD is forecasting the Australian economy to grow by around three per cent over the next couple of years, aided by business investment and exports.

However, it also warns in its report released in Paris on Wednesday that the Reserve Bank could start lifting the cash rate towards the end of this year as wages and inflation growth start to pick up.

The cash rate has been at a record low of 1.5 per cent since August 2016.

However, the OECD also sees a risk to the outlook from the high indebtedness of households.

"Unexpectedly large corrections in house prices would reduce household wealth and could cut consumption and damage the construction sector," it says.

The Paris-based institution believes public investment in roads and other infrastructure projects will also support Australia's economic expansion.

On this month's federal budget, the OECD believes the pace of deficit reduction is "ample" given projected economic growth while noting the proposed reductions in personal taxation over the short and medium term.

OECD'S KEY AUSTRALIAN ECONOMIC FORECASTS:

- GROWTH

2017 (actual) 2.3 per cent

2018 2.9

2019 3.0

- INFLATION

2017 (actual) 2.0 per cent

2018 2.1

2019 2.3

- UNEMPLOYMENT

2017 (actual) 5.6 per cent

2018 5.4

2019 5.3