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Reuters

Australia's falling exchange rate, flexible labour force and record low interest rates are all helping to support the economy, a top central banker said yesterday, but the country will have to get used to less growth from China.
In comments that appeared in line with the Reserve Bank of Australia's wait-and-see stance on monetary policy, deputy governor Philip Lowe also played down recent data that highlighted sharply slower growth.
Figures last week showed the economy grew just 0.2 per cent in the second quarter, taking the annual growth rate down to 2 per cent, well below the long-term average of 3 to 3.25 per cent.
"The data for the June quarter suggests that the economy is continuing to grow at a similar rate to that of the past few years," Lowe said. "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 pickup."
He said annual growth could be closer to 3 per cent 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 was the exchange rate, which has fallen to its lowest in more than six years against the US dollar and on a trade-weighted basis.
"The exchange rate has now adjusted considerably … the depreciation is helping in the downswing," he said.
On China, Lowe said Beijing's handling of the stock market crash had led some to ponder the general direction of Chinese policy, including the likely pace of economic reform, an issue that bore 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," he said.
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," he said.


Weaker currency helping Australia

Australia's economy is growing at a moderate pace, which the central bank attributed partly to a flexible labour force. Photo: Bloomberg

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Deputy central bank chief says flexible workforce and record low interest rates also aiding economy while China offers opportunities


Australia's falling exchange rate, flexible labour force and record low interest rates are all helping to support the economy, a top central banker said yesterday, but the country will have to get used to less growth from China.


Weaker currency helping Australia

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Deputy central bank chief says flexible workforce and record low interest rates also aiding economy while China offers opportunities

Deputy central bank chief says flexible workforce and record low interest rates also aiding economy while China offers opportunities