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Australia businesses should prepare to take at least two decades to build new opportunities in the Asian market, says RBA governor Dr Philip Lowe.
On Wednesday, Dr Lowe addressed the Australian Strategic Forum, noting that Australia is in a fantastic location in the world, closest to some of the fastest-growing regions.
“[Australia’s relations with India and Indonesia provide] tremendous opportunities for growth over the next two decades,” said Dr Lowe.
“I see great opportunities in the Asian region; it’s a matter of us building on those opportunities rather than diversify away from China.”
He emphasised that Australia needs to maintain a strong relationship with China.
When asked if the RBA is making it easier for the Government to borrow, Dr Lowe responded that the RBA’s actions are intended to lower the borrowing costs for everyone in Australia including the Government.
“In the current environment where we are suffering a once in a century pandemic, it’s entirely the right thing to do for governments to borrow against future income to support current income.”
However the Government needs to ensure future income is growing strongly and quickly.
Building strong entrepreneurship
Building strong entrepreneurial skills is an important tool for a promising economic future and recovery.
“We need a strong culture on entrepreneurship and businesses being prepared to take risk. It’s a mindset in the business community and also responsibilities of the government to set the settings.”
“We shouldn’t penalise failure; we should encourage businesses to innovate, to take risk, to expand and to take advantage of the fantastic opportunities this country has.”
“And we need this culture of entrepreneurship to reinvigorate, and if we can, I am confident we can look forward to a positive future.”
Housing market bubble unlikely
Dr Lowe said that it is unlikely Australia will have a housing market bubble in the near future.
Australia is experiencing the lowest population growth since 1916, vacancy rates for apartments are rising and rent is falling.
Thus Dr Lowe argues that the fundamentals are not there to drive unsustainable increases in housing prices.
He stressed that the current low interest rates support housing prices and ultimately people and business’ balance sheets.