Improved productivity key to living standards growth
In a speech to the CFA Institute RBA Deputy Governor Phillip Lowe explains that “it is unlikely that growth in our living standards will again come from a sustained lift in our terms of trade, which remain high in a historical context despite the falls of recent times. Of course, we cannot dismiss the possibility that we will be lucky again. But it would surely be unwise to hope for ever-rising export prices as the basis for improving our living standards. Similarly, with our population ageing, it seems unlikely that we will see a repeat of the large increase in the share of the population in paid employment. This leaves improving our productivity – the bottom line in Graph below – as the only alternative. And this is where our fundamentals matter.” In the speech it was also highlighted that “the rate at which our living standards improve is unlikely to be driven by the actions of the central bank” Click the (VIEW LINK) for the list of fundamentals that Lowe highlights.