RBA Governor - Australia's Economy Healthy But More Needs To Be Done

19 March 2012 21:00 - Florence Fullalove

RBA Governor - Australia's Economy Healthy But More Needs To Be Done

The Governor of the Reserve Bank, Glenn Stevens, has said in a speech at an investment conference in Hong Kong that Australia’s economy was stable but continued restructuring is needed in order to boost productivity. Mr Stevens said that recent data on Australia’s gross domestic product, highlighted that the economy was running more slowing than predicted. However, other reports and figures, including business surveys, pointed to growth around the historical trend of 3.24%-3.5%. “Overall, recent economic performance in Australia is not too bad, particularly when compared over a run of years, to a number of advanced economies,” said Stevens.

Stevens said that there is room for improvement, “Improving productivity growth is just about the sole source of improving living standards, once the terms of trade gain has been absorbed.” He added, “This is increasingly being recognised in public discussion, but it is important we do more than just debate it.” Stevens said that increased investment in Australia, mainly linked to the resources sector, had boosted the nation’s terms of trade and with it the value of the Australian dollar. The high value of the currency had subsequently improved the income of Australians but was forcing domestic economy to change, which had caused some sectors to expand while other had contracted.

Mr Stevens also warned that the situation in Europe was still a risk for the global economy. He concluded that, “There is a long way to go yet. During that long journey, there will surely be numerous episodes of heightened anxiety, any one of which could erupt into a more extreme crisis if one or more of the key actors makes a serious mistake.”