4  BIS Review 67/2010  The Australian economy and the terms of trade I would now like to turn to the Australian economy, which continues to improve from the relatively mild downturn a year or so ago. As is the case for the world economy, the recovery in Australia has been stronger than expected.
In a very real sense, our experience has been much closer to that of many of our major trading partners in Asia, than it has been to that of the other advanced economies of the world. As a result, we are operating closer to full capacity than other developed countries, and the challenges we face are quite different to the ones that they face.