AUSTRALIA LOOKS TO STEADY GROWTH ON COMMODITIES BASE IN 2007.

SYDNEY, Jan 1 Asia Pulse - The new year is shaping up as another year of steady growth as the economy continues to cash in on the global commodity price boom.

High and rising household debt will keep the domestic economy in low gear, but rising export volumes will keep the engine ticking over.

The surge in the prices commanded by Australia's underground bounty on international markets has been phenomenal - they have more than doubled in the past three years.

The economic effect - through mining profits, capital spending, employment and, thanks to surging company tax receipts, personal income tax cuts - "cannot be overestimated," UBS Investment Research chief economist Scott Haslem said.

"The impact of the commodity price cycle is evident both in the commodity states of Queensland and Western Australia, and also in the more obvious construction, mining and utility sectors."

"But it's also evident in the broader economy, from consumers getting tax cuts right down to the guy selling sausage rolls outside the mine site," he said.

The boom has helped the economy make headway against a tide of negative forces and should continue to carry the economy in 2007, maintaining growth in gross domestic product (GDP) at around two per cent in real terms, or even lifting to around three per cent.