Boom Times To Continue, Says Rba
The Age
Friday April 20, 2007
THE economy will continue to grow in spectacular fashion if the Reserve Bank is correct in predicting that emerging economies' continued demand for resources will last several decades.
In its monthly bulletin released yesterday, the central bank said that although the historical tendency was for commodity prices to retreat after a period of rapid increases, emerging economies such as China would continue to demand our resources."There are good reasons to believe that strong demand from emerging economies in particular may continue for several decades, although the adoption of new technologies could see a lower degree of resource-intensive output in these countries over time," it said.It said investment in mining and energy had increased sharply in recent years, and it was reasonable to expect a significant increase in the production of base metals and other resources in the next few years. "While increased supply will exert some dampening influence on prices, the rapid growth in world demand for metals and other resources appears to be showing little sign of abating," the report said.The Reserve Bank also released data on credit card transactions last month that showed consumers had drawn a record 38.2 per cent of available credit in the month, the highest in 22 years. The average credit card balance hit a record high of $2952 in February."Since the Reserve Bank hiked interest rates in May last year, credit card debt has increased at a faster rate, indicating that consumers are being forced to pay off their outstanding balance at a slower rate," said CommSec chief equities economist Craig James.While Australians left more outstanding on their credit cards, they made fewer transactions and the number of advances dropped to the lowest levels in two years.Meanwhile, merchandise imports rose a seasonally adjusted 1 per cent in March to $15,360 million, from $14,099 million in February, helped by the stronger dollar and a revival in global oil prices. In non-seasonally adjusted terms, imports increased by 8.9 per cent."The significant increase in imports (in non-seasonally adjusted terms) this month was driven primarily by the resurgence of global oil prices, with the Tapis oil price increasing by around 11 per cent in March," said Alex Joiner, economist (international) at ANZ."This, combined with an appreciating Australian dollar making the prices of other goods relatively inexpensive and solid domestic demand, were the key drivers of import growth," Dr Joiner said.He said the currency strengthened against our top three import sources in March, rising 2.5 per cent against the US dollar, 2.3 per cent against the yuan and 2.1 per cent against the yen.But he said on a balance of payment basis the estimated rise in imports was relatively modest.KEY POINTS ? The central bank says resources will continue to lead the way for decades.? Demand from China and India are showing no signs of abating, says RBA.ONLINE? For the ABS data, go to theage.com.au/businessday
© 2007 The Age
