The Australian economy functioned strongly amid turbulent global situations and remains resilient to future possible shocks from China's economic slowdown and euro crisis, Reserve Bank of Australia Governor Glenn Stevens said Tuesday.
In a speech called 'The Lucky Country', Stevens suggested that the Chinese economy slowed over recent years, which reflected normal cyclical slowdown and not a sudden slump.
"But not even China can grow that fast indefinitely and there were clearly problems building from that earlier breakneck pace of growth," Stevens added. China is taking well-calibrated measures in the direction of easing macroeconomic policies.
According to Stevens, Australia will feel the effects of the Chinese business cycle more in the future than it has been accustomed to in the past. This will definitely present some challenges of economic analysis and management.
But Steven says it is better to be exposed to a Chinese economy with a high average, even if variable, growth rate, than say, to a Europe with a very low average growth rate.
"If the thing that goes wrong is a serious slump in China's economy, the Australian dollar would probably fall, which would provide expansionary impetus to the Australian economy," the central bank chief said.
In such situation, Australia expects the Chinese authorities to respond with stimulatory policy measures.
Some of the adjustments taken so far by Australian authorities, which seems to be awkward, are actually strengthening resilience to possible shocks, Steven said. Acting sensibly, with a long-term focus, will helps to resolve problems come on the way.
by RTT Staff Writer
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