of the world economy in this episode is that commodity prices, led by chinese demand, have risen sharply at a relatively early stage of the global expansion. apart from oil, the rises have been concentrated in base metals and the two bulk commodities important for australia - coal and iron ore. as a result, australia ’ s export prices have received a huge boost. our terms of trade, which is the ratio of our export prices to our import prices, rose more quickly and to a higher level than anything we had experienced since the early 1970s commodity price boom ( graph 1 ). graph 1 a rise in the terms of trade is an increase in the country ’ s real income. we estimate it has increased our real income by an amount equivalent to about 1½ percentage points of gdp on average in each of the last two years and more is to come. 1 some of this accrues to workers in the resource sector, some to domestic shareholders and a significant amount through increased taxation and royalties to governments. when the additional income is spent, it provides a significant boost to domestic demand through increased consumption and investment as well as via the government sector, although some flows overseas through imports. in the past, we have sometimes had difficulty in coping with these expansionary effects, as they pushed up inflation and added to the boom and bust character of the australian economy. with domestic demand in australia growing at over 5 per cent in 2002 / 03 and 2003 / 04, which is well above long - term potential, and with the economy approaching full capacity in a number of sectors, the extra domestic demand generated by the exceptional rises in the terms of trade could well have had serious inflationary consequences if it had continued. this was particularly so as important prices such as those for oil, steel, plastics, shipping and other inputs to production were rising rapidly around the world. it was these types of concerns that led the bank to raise interest rates a little further earlier this year. in the event, the economic situation has evolved quite favourably, with domestic demand continuing to slow to what appears to be a sustainable pace. output, as measured by gdp, has also slowed and some people are disappointed that gdp growth is now running at a below - average rate, but i view recent events as a healthy correction, and certainly a much better outcome than several other potential outcomes. there are also indications that inflationary pressures are not building as quickly as might have been expected earlier in the year. how has this relatively orderly slowdown come about?

the risks and opportunities related to sustainability, it is less clear how it should go about this. usually, the first thing companies want is a strategy. now, if we want to combat climate change, if we want a sustainable economy. wouldn ’ t it be wonderful if individual companies ’ strategies would somehow be aligned with a much broader world strategy? wouldn ’ t it be wonderful if such a strategy for the world existed? if we are all in the pursuit of happiness, if all men are created equal, not just those of us living today, but all men and women that will come after us, shouldn ’ t we urgently formulate a strategy for the world? fortunately, the world does already has such a strategy : the sustainable development goals of the united nations. and, keeping that in mind, a suggestion i would give to companies is : innovate, while using what ’ s already there. join a platform, cooperate, form strategic alliances ; get an overview of what ’ s happening ; connect with others. today is a great example of just that. for example, the netherlands banking association has recently launched a public consultation document proposing how the dutch banking sector can support a number of the un sustainable development goals. businesses could follow suit by launching a similar initiative. we cooperate on this matter as well : the dutch central bank is part of the g20 green finance study group and of the european high level expert group on sustainable finance. this expert group is mandated by the european commission to come up by the end of this year with nothing less than a comprehensive strategy to turn eu financial regulation green. it will publish its interim report by means of public consultation by the end of next month. if you want to directly influence eu green finance strategy and policy please don ’ t hesitate to send in your comments. using our convening power on a national level, the dutch central bank created a national cross - sectoral platform for sustainable finance, bringing together representatives from all over the financial sector as well as the relevant ministeries, and stimulating the creation of working groups that take on a range of sustainable finance issues. one of these working groups works on sdg impact measurement and consists of a several dutch insurers, pension funds and banks together with major multinationals such as philips and unilever. their goal is to develop a methodology that will allow them to assess the impact on the sdgs of any investments they make. if investors around the world start doing this on a large scale, you can