By Aimee Chanthadavong
There is evidence the economy is starting to pick up, according to the Reserve Bank of Australia governor Glenn Stevens who spoke at Citi’s 5th Annual Australian and New Zealand Investment Conference in Sydney on Monday.
According to Stevens, a number of factors have contributed to the recent uplift.
“We have seen, over the past couple of months, evidence of a lift in sentiment in the business community,” he said.
“A lessening of political uncertainty has no doubt helped this, though we should note that this follows an improving trend in measures of household confidence that began in the second half of last year. That uptrend had a setback in mid-2013, but then resumed.”
Stevens also attributed increase in confidence to the positive trend that is being experience in asset markets. For example, the median house price in Australia has increased by 8 per cent over the past 18 months, reversing a previous decline. Overall the net worth of Australians is more than $800 billion — an increase of 15 per cent since the end of 2011.
“It is not yet clear to what extent, or when, these more favourable trends in ‘confidence’ will translate into intentions to spend, invest and employ,” Stevens said.
“The pace of new dwelling construction is starting to respond to higher prices in the established property market, as we need it to. But at this stage, the available information suggests that broader investment intentions in the business community remain subdued. It may be a while yet before we can expect to see conclusive evidence of a change here.”
Also, Stevens pointed out that while overall credit growth remains low, borrowing has increased hinting that “credit growth may pick up somewhat over the period ahead” and therefore it’s something “we will, naturally, pay close attention”.