BIS Shrapnel chief economist Frank Gelber spoke at a Brisbane conference yesterday.
- Says Australia’s economy will be stuck in low gear for two years
- Said that lower official interest rates would be unlikely to speed recovery in the non-mining industries hurt by the high dollar that was a side-effect of strong resource commodities demand
- Australia won’t return to its long-run average growth pace until 2016 as non-mining industries take time to pick up the slack left by the end of the mining investment boom
- said strong demand for resources commodities was a double-edged sword
- “If commodity demand is strong, we get good revenues but that goes to the miners who are owned largely offshore and the profits go overseas. We get a couple of jobs in the production phase.”
- He agreed with Reserve Bank Governor Glenn Stevens that further cutting the official interest rate probably would not speed up the recovery in non-mining investment
- Last month Mr Stevens said he has “allowed the horse to come to the water (with a 50-year-low official interest rate) but I can’t make it drink”
More at the (ungated) article, and it will be special interest to Queenslanders
