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Australia has more 'growth engines' than it realises-RBA
[SYDNEY] Booming infrastructure spending, expanding resource exports and strength in tourism and services are all "growth engines" for Australia's economy, a top central banker said on Wednesday.
In an upbeat speech on where growth would come from, Reserve Bank of Australia (RBA) Assistant Governor Luci Ellis also cited Australia's relatively rapid population growth and an ongoing pick up in workforce participation, particularly among women.
Ms Ellis made no mention of monetary policy directly, but her optimism on growth is a major reason financial markets have priced out any chance of another cut in interest rates.
Infrastructure spending had a prized place in the outlook as the pipeline of work yet to be done was at its highest levels in decades and much of that was in public transport.
"There are also important indirect effects," said Ms Ellis, who heads the RBA's economics division. "Infrastructure work supports activity in private firms, because they are doing much of the work on these projects on behalf of the public sector.
"Better public infrastructure is also thought to boost productivity in the economy more broadly. Transport infrastructure seems to be especially good at this." Another source of growth was resource exports as previous massive investment in mining projects lifted output, especially of liquefied natural gas.
Ms Ellis estimated resource exports would add about 1.2 percentage points to gross domestic product growth over the next two years and account for half of Australia's export revenue.
Tourism and service industries were also growing strongly thanks to the decline in the Australian dollar over the last couple of years as a decade-long boom in mining investment faded.
"Part of the answer to the question 'where is the growth going to come from?' is 'all the industries that had been growing more slowly than usual during the boom'," said Ms Ellis.