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Published on: Wednesday, April 22, 2009

The Reserve Bank Governor, Glenn Stevens, conceded we are going into recession but outlined six reasons why we should be confident that it wont be, in my words, a really rough recession.

This is what he said: “I suggest that Australia has a very good chance of offering an economic setting in which the following conditions hold.

  • First, political stability remains assured – something becoming a bit less common.
  • Second, the Government does not own, and has not had to give direct financial support to, the banking system. Australia will be free of the difficult governance and exit strategy issues that such support is raising in a number of countries.
  • Third, public finances remain in very sound shape, with modest debt levels and a mediumterm path for the budget back towards balance. Without the massive obligations arising from bank rescues that will inevitably narrow the options available to governments in other countries, Australia should be able to articulate such a path more effectively than most.
  • Fourth, sensible policy frameworks – both macroeconomic and microeconomic – remain in place; the financial regulatory system is strong and tested.
  • Fifth, we remain open for trade and investment, and have a capacity to deploy both our own and other people’s capital carefully and profitably.

  •  Finally, there is an exposure to, and an engagement with, an Asian region that still has the most dynamic growth potential in the world, where hundreds of millions of people will for decades to come be seeking rising living standards. 


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