1. The Growth of Asia and Some Implications for Australia ♫

Talk at Australian Investment Conference (Sydney – 19 October 2009)

Philip Lowe (Assistant Governor):

Thank you very much Paul and good afternoon to all. It’ a … it’s a pleasure for me to be here this afternoon. As you all know, the last 18 months has been an extremely challenging period. Late last year we saw risk aversion sweep around the world. Global capital markets virtually shut down, confidence in many financial institutions was shaken to its core. Global industrial production collapsed, and so did the value of world trade. The result of all this has been the worst global downturn since the early 1930s.

Yet, despite what has been an incredibly difficult international backdrop the Australian economy has been surprisingly resilient. Amongst the major developed countries of the world Australia is the only one that has not recorded a negative year-ended growth rate during the global downturn. And somewhat remarkably it’s also the only one that has not recorded a drop in its export volumes over the past year.

There are a number of reasons for this relatively good performance; I think they are now pretty well understood. The timely and large adjustments to both monetary and fiscal policy have been important. So too has the healthy state of the banking system. The depreciation we saw at the second half of last year was also important. And last, but certainly not least, has been Australia’s trade links with Asia, and in… and in particular China, have been very important.

Rather than go over this ground again today, I’d like to lift my gaze a bit beyond the current immediate outlook for both the economy and interest rates to focus on a medium-term structural issue. While it’s always a bit treacherous doing that given the very large uncertainties involved, and it’s important we periodically do that if we are to appropriately plan for the future.

My central theme is that there are reasonable grounds for considerable optimism about the prospects for the Australian economy over the decade ahead. There are a number of reasons for this, but the one that I would like to focus on today is our growing trade links with Asia.

Over the past decade this’ been a significant shift in economic weight from the advanced economies of the world on the one hand to the emerging world on the other, particularly those in Asia. This shift has picked up recently, with many of the advanced economies weighed down by the problems in their financial systems. But more importantly for Australia, this shift has much much further to run and it’s likely to have profound effects on our prospects and on the structure of our economy. And nn my time today, I would like to talk about some of the changes that we are seeing and I think we will see.

2. Stonehenge ♫

Stonehenge is a monument built in a circular setting. It’s in Wiltshire, a few miles north of Salisbury. It’s formed by large standing stones – they’re exceptionally large, in fact, up to nine metres high and weighing thirty tons. Originally, there must have been over a hundred of them, but only about thirty are left now. The monument was built at three different periods between 1800 and 1400 BC, and in the second period blocks of volcanic rock were brought from Wales. Most of the stones come from Marlborough Downs – that’s about twenty miles north of Stonehenge. It was a place of worship of some kind. But it had nothing to do with the Celtic Druids, as some people think nowadays. That mistake has led to people making a nuisance of themselves in recent years. A few of them have tried to hold occult ceremonies. That’s why the site is no longer open to public as it used to be.