Things are about to look up for the Australian economy as the sector may see a ‘healthier growth rate’ of 2.6 per cent in 2012-13 financial year, which would be supported in part by lower interest rates.

Deloitte Access Economics partner David Rumbens said retailers are due for a break after suffering these last two years.

“There is blue sky ahead but the economy may need to walk a tightrope for retailers to get there,”

In the Deloitte Access Economics retail forecasts report, by financial year, retail sales growth in 2010-11 was just 0.7 per cent and it may rise modestly to 1.2 per cent growth in 2011-12.

“As a result the casualties are starting to mount with Borders, Angus & Robertson and Colorado in administration and Billabong closing stores. Fierce competition from overseas online retailers is taking a degree of the spoils,” Rumbens said.

“However, other key culprits are the slowdown in jobs growth, the trend move to a higher level of savings, and the trend towards services and non-retail necessities (such as electricity) taking a greater slice of the consumer budget.”

But what could change this positive outlook is the high Australian dollar, consumer confidence, the jobs growth level and global economic risks, in particular the crisis in Europe.

On a state-by-state basis, retail sales growth over the past year is very much mirroring the broader economy.

“The resource-driven jurisdictions of Western Australia, Northern Territory and Queensland are doing better than the national average (though Queensland only marginally so), while everyone else is doing worse. The split may become more unbalanced before it gets better,” Rumbens said.