Australia's economy and banks remain strong, says RBA

13:46, September 30, 2010      

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Australia's economy and financial system are relatively strong as the health of the global banks have improved, the Reserve Bank of Australia (RBA) said on Thursday in its half-yearly review.

"In the period since the previous Financial Stability Review the health of the major international banks has mostly improved, despite a significant amount of uncertainty in financial markets," the RBA said in the review, released on Thursday.

The RBA said financial conditions were "quite buoyant" in faster-growing Asian and Latin American economies.

"The financial system remains in relatively strong condition, as does the broader economy," the RBA said.

The effects of the global crisis and following recession on Australia were "quite mild" and economic growth "has now broadly returned to trend" it said.

The financial position of the housing and business sectors remained strong, the RBA said.

"Despite being more indebted, households' debt-servicing ability is currently strong, supported by ongoing income growth," the RBA said.

The RBA said housing price rises had stayed broadly in line with growth in incomes since a significant rise in the price to income ratio between the late 1980s and early 2000s.

"Since then, during a time of strong population growth in Australia, price rises nationally and in capital cities have on average been broadly in line with growth in incomes."

"Nonetheless, many markets have experienced very strong capital growth in recent years, particularly in Melbourne, and the recent slowing in price appreciation is a welcome development for the resilience in household finances," the RBA said in the review.

Source: Xinhua


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