Economic growth is likely to remain subdued in Australia for some time, but many of the biggest global economic risks have abated over the last year, Reserve Bank Governor Glenn Stevens has told the House Economics Committee.
Mr Stevens told the committee previous forecasts for GDP growth of between two to three percent in the coming years remain largely accurate, as private consumer demand remains subdued and mining investment passes its peak.
However he said that the expected decline in the resources sector could provide greater opportunities for other sectors of the economy as investors look elsewhere.
“Investment in dwellings shows clear signs of a significant increase, and exports of resources will continue to rise strongly,” Mr Stevens said.
“Putting all this together, our expectation is that the below-trend growth in GDP we have seen for a while now will probably continue for a bit longer yet.
“Over the more medium term, there are good grounds to think that growth can strengthen.”
Mr Stevens also indicated that official interest rates are likely to remain at their current level for some time, saying that while the Bank has an open mind about further cuts there are currently few serious claims that the cost of borrowing is holding back investment.
“On the contrary, monetary policy is supporting higher spending by altering incentives as between spending and saving, and working to create an environment in asset and credit markets that eases the restraints on some sorts of activity,” Mr Stevens said.