To say there have been some pretty powerful, and disparate, forces at work is something of an understatement, even for a central banker. At present, while growth in Australia’s group of trading partners is about average, and is higher than the rate of growth for the world economy as a whole, the nature of that growth is shifting.
The growth in Chinese demand for iron ore, for example, has weakened at the same time that supply has been greatly increased, much of it from Australia. Iron ore prices are therefore falling and contributing to a fall in Australia’s terms of trade.