Excerpts from the Speech of Philip Lowe , Deputy Governor, at the Corporate Finance Forum, Sydney – 18 May 2015
"...(L)argely on the back of strong growth in China... investment in the resources sector in Australia picked up considerably to take advantage of these high prices and Australia's endowment of natural resources, especially iron ore, coal and natural gas. These developments, which were interrupted briefly by the financial crisis of 2008 and 2009, can be seen clearly in this first graph . By 2012, mining investment, as a share of GDP, peaked at its highest level in at least a century.
In 2014, the tonnage of iron ore exported was double that of five years earlier, while the tonnage of coal exported was up 40 per cent over this same period. There has also been growth in LNG exports, although the really big increases still lie ahead of us. All up, growth in resource exports has contributed around 1 percentage point to annual GDP growth
Over the past three years, GDP growth has averaged around 2½ per cent, and the RBA'slatest forecasts, which were released around 10 days ago, have this type of growth continuing for a while yet (Graph 3). While in many other developed economies, growth of 2½ per cent would be viewed fairly favourably, it is below what we have become used to in Australia and it is below what we are capable of. As a result, there has been a build-up of spare capacity in the overall economy
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Source: Reserve Bank of Australia
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