Reserve Bank of Australia Confident on Growth

Australia’s record-low interest rates, weaker currency and improving sentiment should help revive growth in industries outside resources, central bank Deputy Governor Philip Lowe said.
“A pick-up in non-mining investment is an important part of the story in the return of the Australian economy to trend growth,” Lowe said in the text of a speech to be delivered in Melbourne today. “Our expectation is that this will take place, with growth in non-mining investment predicted to pick up to at least high single-digit rates within the next couple of years.”

Lowe cited a better outlook in the manufacturing and tourism industries after an 8 percent drop in the exchange rate against a basket of other currencies since April, which has aided firms that boosted their efficiency. “A further depreciation would be helpful in rebalancing growth in the economy,” the deputy governor said, referring to the local currency.
Lowe’s speech reflects increasing confidence the Reserve Bank of Australia’s two-year easing cycle and an election that ended the nation’s first hung parliament since World War II will allow the country to avoid a growth gap as a resource boom wanes. The RBA’s No. 2 official said he wouldn’t be surprised if mining investment relative to gross domestic product fell by 3 percentage points or more in coming years.

via Bloomberg

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