(8 September 2011 – Australia) Reserve Bank of Australia governor Glenn Stevens said in an address in Perth this week that Australia’s economy faces a “very unusual and powerful set of complex forces”.Mr Stevens said the outlook for global growth was not as strong as it had appeared three months ago.
Further, the non-mining sector of the domestic economy was not performing as well as had been expected.
‘Economic growth has been uneven and patchy, and financial concerns keep recurring, with waves of positive and negative sentiment sweeping global markets.
‘Australians feel the effects of those swings in sentiment.’
He said in net terms the outlook for the non-resources economy in the near term was weaker than it looked a few months ago and that mining in Queensland was taking longer after the floods than earlier predicted.
But while growth was weaker than had been forecast – underlying inflation appeared to be turning out higher, Mr Stevens said.
This meant that the supply potential of the economy was key to the RBA’s thinking on interest rate decisions.
‘This is why the current productivity discussion is so important,’ Mr Stevens said.
‘Incidentally, the desire for more productivity is not a call for working harder.
‘Australians already work pretty long hours by international standards.
‘Productivity per hour, which is what counts, is not improved by adding more hours, but by finding ways of making the hours that are already being contributed more effective.’