Australian banker optimistic about China's demand for Australian commodities

16:01, August 20, 2010      

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The Reserve Bank's deputy governor Ric Battellino said here on Friday that the Reserve Bank was optimistic that China's demand for Australia's commodities would make up for some of the deficiency in productivity growth, leaving Australia at least a couple of years of continuous economic expansion still ahead.

"Relative to prices of our imports, export prices are at their highest level in 60 years," Battellino told a group of business leaders at a council forum.

"This is generating a large increase in income for the country: we are forecasting that Australia's gross income will rise by about 10 percent this year," the well-known banker predicted.

Battellino also said the economic reforms over the past 30 years have made Australia a world-beating economy over the past two decades.

Australia's economy had only experienced three quarters without economic growth since 1991, and annual growth had always been positive since the end of the early 1990s recession, he noted.

"The period since 1991 is the longest period of growth that Australia has recorded for at least the past century," he said.

Battellino pointed out that the floating of the Australian dollar in the mid-1980s has been one of the key factors that had kept the run of annual economic growth unbroken, despite the Asian financial crisis of the late 1990s and the global financial crisis.

He also rates labor market deregulation, such as enterprise bargaining, changes to competition and industry policy, and financial system reforms as important to Australia's economic performance.

He also praised the fiscal management of Australia's governments over the past 20 years.

"Budget surpluses were recorded in 10 of the 19 years since 1991. Government debt was reduced sharply, leaving Australia as one of the best positioned developed economies in terms of government finances," he said.



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