Reserve Bank of Australia board member Warwick McKibbin said that the mining boom in Australia and its economic effects would be better managed if the national policies were sharper. Of the large surge of income into the economy he said that all tools of policy have to be focused on the key issue facing the country, the resources boom.
Professor Warwick McKibbin. Image Credit: The Australian National University
He was speaking in Washington when he said that the current budget settings for Australia were designed for a country in recession. He also said that clearly that hasn't happened and the policies need to be revisited.
He also saw a strong risk of international shocks from Europe being renewed unless a radical adjustment is made in approaching the sovereign debt crisis. On the other hand his expectations from China are positive as he foresees that China is going to grow strongly.
Although he did warn the Australian government to design policies that would give the economy more flexibility in case the Chinese did not live up to its potential. He wanted the nation to be prepared for a possible slowdown in China.