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[CANBERRA] Australia's economy should pick up speed after a sluggish start to the year, a top central banker said on Monday, while also pointing to several headwinds for the Pacific nation.
Appearing at a leadership conference, Reserve Bank of Australia (RBA) Governor Philip Lowe cited a recovery in the global economy, upbeat surveys of local business sentiment and strength in employment as reasons for optimism. "It is likely that growth over the next couple of years will be a bit stronger than it has been recently," he said. "The pick-up in the global economy is helping us. The return of mining investment to more normal levels is almost complete," he added. "Employment growth has also strengthened over recent months. These are all positive developments."
The economy expanded by a disappointing 0.3 per cent in the first quarter of the year, while annual growth was the slowest since 2009 at 1.7 per cent.
The RBA's optimism on the outlook is a major reason it has resisted pressure for another cut in interest rates, which are already at record lows of 1.5 per cent.
Mr Lowe conceded there were hurdles ahead including slow wage growth, high levels of household debt and rising home prices in some of the major cities."As things currently stand, it looks likely that average growth in per capita incomes over the next quarter of a century will be lower than over the past quarter of a century," said Mr Lowe.
Economic reform was needed to enhance living standards, though Mr Lowe said there seemed to be a shortage of good ideas that could get through Australia's deadlocked political process.