Reserve Bank deputy governor Philip Lowe gave an upbeat assessment of the economy this week. He said it was strong enough to resist any downturn pressures and flexible enough to adapt to the changing world. “My central message is that these fundamentals are strong and that they provide us with the basis to be optimistic about the future,” he told a business conference.
Dr Lowe said the weaker dollar has helped the economy deal with global shocks, such as the recent fall in commodity prices. “The depreciation over the past couple of years is playing an important role in helping the economy adjust to the wind-down of the boom in mining investment,” he said.
The weaker currency makes locally-produced good and services more competitive with dearer imports, which gives a boost to local tourism, retailers and manufacturing.
Dr Lowe said Australia’s links with Asia would keep the economy strong, not just through mining and resources exports but also though agriculture. “As average incomes in Asia grow, so too does the demand for protein,” he said. “With our large tracts of agricultural land and the expertise built up from using that land over many decades, Australia has obvious advantages here.”