Better economic times ahead, says Reserve Bank deputy

Chamber Talk with QT Better Business columnist Brett Kitching.
Chamber Talk with QT Better Business columnist Brett Kitching.

THE Reserve Bank of Australia (RBA) deputy governor Dr Philip Lowe last week at the Australian Investment Conference forecast promising economic times for Australia in the near future.

The current low interest rates, growing business confidence, and a weakening exchange rate are the keys to a growth in Australian Business Investment in the next few years.

The current base of non-mining investment is possibly at its lowest level since the recession of the early 1990s meaning there is probably only one way to go for investment - and that is up.

The reasons given by the deputy governor for such a low base of recent investment were a combination of post-GFC fears, changing household spending behaviour, a high Aussie dollar and the subsequent lack of business confidence as a result, and government spending uncertainty due to the previous hung parliament.

This last item had a lot of RBA importance placed on it - the RBA believes that the action of taking of risk through business investment is more likely if the policy environment is predictable and hence the reason for a surge in business confidence after the recent federal election.

The mining sector which has thrived in recent years has in effect balanced the low non-mining sector investment, managing to keep Australia out of recession. However as the mining sector investment softens, the RBA is predicting a sharp upturn in other areas.

The report of Coles Supermarkets last week confirmed a brighter air of confidence in the retailing sector.

Coles' sales were up 4.4% in the September quarter as compared to the previous year, and the hope from all retailers is that there will be a bonanza next quarter leading into Christmas.

On top of this retailing news, the Australian share market last week jumped to its highest level for almost six years. A rising property market - something that is becoming more and more evident at home here in Ipswich also helps to point towards a bright and prosperous time over the next few years.

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Topics:  better business brett kitching chamber talk with brett kitching opinion

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