Situation
GDP grew by 0.8 % in Q4 2006 as compared to Q3 2006. Q3 2006 had grown by 0.68% over Q2 2006
GDP is now 2.99 % higher than the same period last year. For the year 2006 as a whole GDP rose by 2.7 % per cent over 2005.
A rise in the trade deficit in real terms acted as a drag on GDP in Q4 2006 , deducting 0.2 % points.
Conclusion
The current interest rates at 5.25% will act as a drag on GDP growth in the coming Quarters.
While a 3.5% growth still looks possible in early 2007 - GDP growth rate looks like dropping towards the 2.00% area from end 2007 towards mid 2008. ( click/double click on chart for the larger picture)