The Reserve Bank is tipping the resources boom could last another two decades as the tally of resource projects with firm commitments soars to $133 billion.
Obviously this is good news for the Australian economy and this will in turn underpin our property markets.
Addressing a business lunch in Perth recently, RBA deputy governor Ric Battellino said the strength of Asia represented “a very favourable global environment for the Australian economy”, notwithstanding the weak state of the major advanced countries. The Australian reports.
Mr Battellino said business activity had now surpassed pre-crisis levels in all developing Asian countries, and China and India were going through periods of development where use of steel was very intensive.
“In the past, other countries have taken up to 20 years to move through this phase,” he said. “It is likely that China and, more particularly, India will have strong demand for steel for quite some time.”
The Reserve Bank expects commodity prices to decline eventually as new supply comes on stream and as the world economy slows. However, Mr Battellino said there had been no sign of this yet.
The Organisation for Economic Co-operation and Development recently slashed its forecast for advanced country economic growth next year from 2.8 per cent to 2.3 per cent.
The growth outlook for the US was marked down by a full percentage point since the previous review in May.
“Output and trade growth have softened since the early part of the year, as temporary growth drivers, including the boost from fiscal support measures, have faded,” the OECD said.
It said Australia would achieve 3.6 per cent growth next year, making it one of the best-performing of the advanced economies.
Mr Battellino said the Reserve Bank also expected the two-speed global economy to continue, with the US economy losing momentum as households confront falling house prices and more foreclosures.
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