- Glenn Stevens, RBA Governor
While the RBA keeps its cash rate at record low and expects a period of steady borrowing costs amid flagging economy, with the central bank trying to rebalance the economy as Australia's mining investment boom fades, the Australian economy is capable of weathering difficult economic conditions, but relying on interest rates alone will not help the country's financial woes. Although, low interest rates continue to support the economy, most indicators have weakened somewhat during the second quarter and are poorly placed for the second half of the year. Nevertheless, Lord Mervyn King, a former Bank of England governor, believes that the outlook for Australia's resources industry continues to remain optimistic despite the negative short-term outlook shared by others. King said low interest rates bolster equity and commodity markets, but uncertain geopolitical environment will boost commodity prices.
Meanwhile, the RBA also expresses its discontent with strong Australian Dollar, which continues to weigh on the non-mining sector and export earnings. However, there is one driver of growth, which no one pays attention to. Exports of services have been growing strongly over the past two years despite strong local currency. Total services exports grew 9.1% in the latest financial year to $57.6 billion, which is 43% more than the value of coal exports and $531 million greater than what iron ore miners managed in 2012-2013.
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