InDaily

Adelaide's independent news

Support

Economy doing OK following boom: RBA

Business

Booms and busts in export prices usually bump the economy off the rails – but not this time, according to Reserve Bank of Australia boss Glenn Stevens.

Comments
Comments Print article

The surge in the terms of trade – export prices compared with import prices – pushed investment in the resources sector to a record high relative to the size of the economy.

“This peak was about eight per cent – nearly three times the size of the normal peak, and easily the biggest such surge for over a century,” he said in a speech in Perth on Friday.

“On other occasions, these types of events have ended up being very disruptive for the national economy.”

In the past, such booms have typically boosted inflation then, when commodity prices fell, ended with slowdowns or recessions, he said.

But that hasn’t happened this time.

“Inflationary pressure was relatively contained on the way up, and while aggregate growth has been a little disappointing for the past couple of years, in the circumstances we face – including very difficult global conditions in the aftermath of the financial crisis – the outcomes are, I think, quite respectable,” Stevens said.

While this episode was not yet complete, he said the economy overall has been recording growth.

As Stevens was delivering his speech, the Australian Bureau of Statistics released data showing gross domestic product grew by 0.9 per cent in the September quarter.

That quarterly rise, the strongest for three-and-a-half years, lifted annual GDP growth to 2.5 per cent.

That was faster than the 1.9 per cent expansion over the year to the June quarter, but exactly in line with growth over the preceding year and below the 3.0 per cent average for the decade ahead of the mid-2012 peak in resource investment.

“Looking ahead, nationally, the outlook appears to be for a continuation of moderate growth,” Stevens said.

He pointed to recent RBA forecasts that GDP would grow by two to three per cent over the year to mid-2016, and then to “pick up a bit” over the following year.

AAP

We value local independent journalism. We hope you do too.

InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.

Powered by PressPatron

Comments

Show comments Hide comments
Will my comment be published? Read the guidelines.

More Business stories

Loading next article

Subscribe to InDaily – it’s free!

South Australia’s locally owned, independent source of digital news.

Subscribe now and go in the monthly draw* for your chance to WIN a $100 voucher!

Subscribe free here

*Terms and conditions apply

Welcome back!

Did you know it’s FREE to subscribe?

Subscribe now and go in the monthly draw* for your chance to WIN a $100 voucher!

Subscribe

*Terms and conditions apply