MELBOURNE: The Australian economy is well placed to benefit from its proximity to Asia during the next decade, Reserve Bank of Australia (RBA) Governor Glenn Stevens says.
In a speech, Cross-Currents in the Global Economy, at the Australian Industry Group’s National Forum in Canberra, he said the national real income would continue its upward trend during the next decade.
“As a broad observation, and definitely not as a precise forecast, we might expect that a decade from now Australia’s per capita gross domestic product will probably be roughly 15 per cent higher in real terms than it is now, give or take a few percentage points.
“The economic policy arguments, by the way, will all be about what policies might gain or lose those few percentage points,” he was quoted by the Australian Associated Press as saying.
Stevens said future success for Australian businesses would depend on how they evolved and wouldn’t rely on forecasting.
“It will be a result of adapting to the way the world is changing and giving constant attention to the fundamentals of improving productivity,” he said.
“That adaptability is as important as ever, in the uncertain times that we face.” As the Asia-Pacific continued to expand, the regional economies would exert more independent influence on their economic performance, Stevens said.
“It used to be said that when the United States sneezed, Asia caught a cold,” he said.
“Recently it seems that the United States has contracted pneumonia, while Asia sneezed and caught a bad cold, but then recovered pretty quickly.” Australia’s proximity to Asia had been beneficial, with significant changes in the destination of the nation’s exports, Stevens said.
He said China bought 5.1 per cent of Australia’s exports in 1999/2000, with that ratio rising to 23.2 per cent a decade later.
“The emergence of Asia is to our advantage, if we respond to it correctly,” he said.
“But there is no free ride from the global or regional economy and there will never will be.
“Nor is it to deny that a country’s own policies, for better or worse, and followed over a long period, also make a significant difference to its economic outcomes.” Stevens said the recent focus on more flexibility of exchange rate, particularly in key emerging nations in Asia, would provide a more balanced outcome, but it was not enough on its own.
“Changes in exchange rates don’t themselves create global growth, they only re-distribute it,” he said. — Bernama