Access Economics' report Can retailers thrive in a small Australia?, to be published today, said despite talk of cutting migration and the difficult recovery from the global financial crisis, retailers could be somewhat optimistic about the future.

It is predicting real sales will grow by a solid 3.2per cent nationally in 2010-11, lifting to 3.7per cent in 2011-12 during the peak of an expected housing construction upswing. Expected higher interest rates would dampen growth in 2012-13, when it was predicted to fall to 1.6per cent.

The report said the ACT was one of the better performing jurisdictions for retail sales over the past year, even though sales fell during the June quarter.

''With moves to rein in federal government spending over coming years, the ACT economy may feel the pinch. The sagging ACT construction sector was the key local negative in the past two years, but that was more than offset by the impact of federal stimulus on the public service,'' it said.

''As that stimulus fades, income growth and therefore retail sales growth in the ACT may be more modest over the next two years. Yet a minority federal government may find it harder to take tough decisions, providing the ACT with another reprieve on this front.''

Access predicts the ACT will have the lowest retail sales growth in the county in 2011-12, at 0.8per cent and below-average growth of 1.4 per cent in 2012-13, before it bounces back to above-average rates of 3.8 per cent and 5.5 per cent in 2013-14 and 2014-15 respectively.

For more on this story, including details of the national impact of the end of stimulus spending, see the print edition of today's Canberra Times.