Economy

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RBA Governor Philip Lowe speaking to the House of Representatives Standing Committee on Economics Friday said the global upswing is helping China's and Australia's economies as trade increases and commodity prices rise.

RBA Lowe.

Rather than just one or two economies doing better, the improvement has been broadly based, with a synchronised upswing taking place. Partly as a result, both international trade and commodity prices have picked up and this is helping the Australian economy. Gov Lowe Opening Statement

Highlights

  • Over recent times, many investors have been proceeding on the basis that this combination of strong growth, low unemployment, low inflation and low interest rates would persist. Many also expected the low volatility in asset prices to continue.
  • A couple of weeks ago we saw a re-evaluation of some of these assumptions by some investors, with the catalyst being a pick-up in wage growth in the United States. The result has been an increase in bond yields, a decline in equity prices and increased market volatility.
  • Above-trend growth at a time of low unemployment should be expected to see inflation lift, even if that lift is gradual because of factors that are affecting wage and price pressures globally.
  • To add to the mix, fiscal policy in some countries, most noticeably the United States, is becoming more expansionary China Another important international influence on our economy is what happens in China.
  • Like other economies, China is benefiting from the global upswing. At the same time, there are ongoing efforts to increase the sustainability of China's economic growth, both in terms of its financing and the environment. These efforts are affecting both the structure of finance in the Chinese economy and commodity markets.

Source Opening Statement to the House of Representatives Standing Committee on Economics;

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