The Governor of the Reserve Bank of Australia, Glenn Stevens, has commented that the Australian economy has performed surprisingly well throughout the global economic crisis. But he has warned Australians not to get complacent.
In his address to The Anika Foundation Luncheon yesterday, Stevens commented that six months ago he was very worried about the future of our economy.
“Six months ago, my own view was that the biggest risk to the Australian economy was an unwarranted loss of confidence in our medium-term prospects. Late last year, survey after survey pointed to a major battening down of the hatches by businesses across the country,” he said.
“Now, however, it looks like confidence has recovered some ground.”
Stevens also discussed how many businesses have found that the worst has not occurred and are now looking at their medium terms strategies for the next expansion.
“They are tending to try to hang on to employees who were recruited and trained at some expense and who will be needed in the future under conditions of stronger demand,” he said.
“Many listed companies are taking the opportunity to raise new equity and strengthen balance sheets. The fact that they can tap the markets for these funds says something about the underlying resilience of the system.”
According to Stevens, consumer confidence is also on the rise and has recovered a lot of ground.
“In fact in recent readings it has been at or above long-term averages. This should not be entirely surprising.”
Stevens attributed this growth to the various fiscal packages, declining petrol prices and a slower than expected unemployment rate.
“To date, the rise in employment has been a little slower than earlier feared, and the effect of the more positive factors for households has, so far, outweighed fears of unemployment,” he said.
But despite these positive signs, Stevens warned Australians not to get too comfortable.
“Just as it would have been a mistake nine months ago to write-off our long-term economic prospects at the height of the financial turmoil, it would be a mistake now to lapse into the comfortable assumption that easy prosperity will come our way.”