Australian Economy Stays Resilient

24 July 2012 03:00 - Lucy Williams

Australian Economy Stays Resilient

Despite global shocks felt by economies all round the world Australia stays strong and continues to show signs of growth. Predictions of further problems facing global economies, including escalating debt issues in the Eurozone and a slowdown in China, will no doubt greatly affect most developed economies however it is hoped that recent changes in the Australian economy’s structure will make the country more resilient.

Reserve Bank of Australia governor Glenn Stevens told of how Australia’s economy was performing well in spite of the global economic crisis. At the Anika Foundation speech Stevens appeared relaxed about the state of the economy and did not seem too concerned with the developments facing the Chinese economy, Australia’s largest trading partner. The lack of panic and comfortable outlook on the future of the Australian economy shown by the RBA shows that Australia is on track and perhaps will not be as susceptible to the next economic shock. Stevens believes that in the event of global economic conditions deteriorating any further Australia would be able to use macroeconomic policy if needed.

Confidence for the Australian economy can be put down to higher household savings, stable home prices, differing attitude towards debt and a shift by banks to domestic sources of funding. These have fuelled growing optimism for the country’s economy.

Stevens also appeared relaxed about the state of China’s economy stating that “even if one is concerned about the extent of problems that may lurk beneath the surface in China-say in the financial sector-it is not clear why we should assume that the capacity of the Chinese authorities to respond to them is seriously impaired”.

Australia continues to show economic growth standing out above other developed economies. The Australian economy is reported to have expanded by 3.2 percent over the year with forecasts of further growth over the next five years of up to 3.4 percent. Australian Federal Treasurer Wayne Swan believes reports of Australia’s economic strength are the envy of other developed nations due to the economy’s “solid growth, low unemployment, contained inflation, low interest rates, healthy consumption and a massive investment pipeline”. Gross Domestic Product (GDP) is expected to remain at its current rate of growth however there is talk of this resulting in the country’s economy feeling increased sensitivity towards commodity price swings.