Australia
economy flexible, China still offers opportunities: RBA
Send a link to a friend
[September 09, 2015]
By Ian Chua
SYDNEY (Reuters) - Australia's falling
exchange rate, flexible labor force and record low interest rates are
all helping to support the economy, a top Australian central banker said
on Wednesday, but the country will have to get used to less growth from
China.
|
In comments that appeared in line with the central bank's
wait-and-see stance on monetary policy, Reserve Bank of Australia (RBA)
Deputy Governor Philip Lowe also downplayed recent data that
highlighted sharply slower growth.
Figures last week showed the economy grew just 0.2 percent in the
second quarter, taking the annual growth rate down to 2.0 percent,
well below the long-term average of 3.0-3.25 percent.
"The data for the June quarter suggest that the economy is
continuing to grow at a similar rate to that of the past few years,"
Lowe told a lunch in Melbourne.
"Most other recent indicators are also consistent with a moderate
expansion in the Australian economy. The missing ingredient
continues to be a lift in non-mining business investment, where we
are still waiting for convincing signs of a pick-up."
![](http://archives.lincolndailynews.com/2015/Sep/09/images/ads/current/best_friends_sda_010515.png)
Lowe said annual growth could be closer to 3 percent if that were to
occur. He also pointed to the country's "considerable ability to
adjust", noting it had gone through a once-in-a-lifetime mining
investment boom without overheating.
"We are now adjusting to the downside, while still managing to grow
at a moderate rate. This is a significant achievement and is a
testimony to the underlying flexibility of our economy."
Lowe said an important element in this flexibility is the exchange
rate, which has fallen to its lowest in over six years against the
U.S. dollar and on a trade-weighted basis.
"The exchange rate has now adjusted considerably... the depreciation
is helping in the downswing," he said.
[to top of second column] |
![](http://archives.lincolndailynews.com/2015/Sep/09/images/ads/current/rohlfs_lda_051513.png)
On China, Lowe said the Chinese authorities' handling of the stock
market crash has led some to ponder the general direction of Chinese
policy, including the likely pace of economic reform, an issue that
bears close watching.
"We became used to extraordinarily strong growth in China and now we
are having to get used to something a little less extraordinary."
Yet, Lowe pointed out the benefits of having deeper ties with an
economy that is set to become the world's biggest at some stage.
"As a nation, we need to keep an eye on these opportunities, while,
at the same time, understanding and managing the associated risks as
best we can."
(Editing by Shri Navaratnam)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2015/Sep/09/images/ads/current/Symphony_lda_091814.png) |