Australia in good shape, says central bank chief
Glenn Stevens said Australian corporate balance sheets were solid, terms of trade at record highs and unemployment low, despite the jobless rate unexpectedly rising 0.1 percentage point to 5.1 percent in July.
"There is a heightened degree of uncertainty at present. There are major challenges in the global economy and significant forces at work in the Australian economy," he told a House of Representatives economics committee.
"But at this point in time, our terms of trade are at a record high, while our unemployment rate remains low. Inflation bears careful watching, but we can keep it under control.
"Our banks are strong, our currency is sound and our sovereign credit position is in the international top tier.
"If we are entering another period of weaker international conditions, this is a pretty good starting point from which to do so."
Mining-driven Australia weathered the last global downturn without entering recession thanks to the resilience of key export market Asia, and was the first advanced economy to resume lifting interest rates.
The Reserve Bank of Australia governor said investment in the resources sector was continuing and "has some distance to run yet".
"This is having positive spillovers to some parts of the Australian economy," he said, pointing to engineering, surveying and consulting firms.
But he acknowledged that other parts of the economy were hurting from a high Australian dollar and tightened consumer spending.
As far as key Asian markets go, Stevens said "indicators suggest some moderation in growth in the Chinese economy. But it appears to be still pretty solid".
"Around Asia, inflation rates have generally tended to rise over the past six months," he said.
"A key question for the countries in the region is whether enough has been done to contain the inflation pressure, which does look to have spread beyond initial rises in food and energy prices.
"Asia's management of these challenges will ultimately matter a good deal for Australia, and for the world."
Copyright AFP (Agence France-Presse), 2011