- seated attitudes to saving, which remain very different across the regions of the world. as incomes in asia continue to rise, saving rates will probably decline over time, but only gradually. meanwhile, aggregate saving rates in america and europe will have to rise over time, given the extent to which financial obligations have grown relative to likely future income, particularly on the public side. the key question is whether these two trends, in opposite directions, will occur at the same pace, or not. good policies can certainly help the world get to a better solution than might otherwise occur. but even with good policies, it is likely to be a slow grind out of the current difficulties for some countries. we probably have to accept that global growth was unsustainably fast in the few years prior to the crisis, that too much capacity of certain types was built up in the wrong places, that spending in some countries ran too far ahead of permanent income and that a period of adjustment and structural change cannot be avoided, even under ideal policy settings. if that is so, then, in all countries, an emphasis on accepting the need for adjustment generally – not just in exchange rates but in economic policies and structures across the board – is key. conclusion economies are not static machines. they are a complex and dynamic combination of actors, all continually seeking to adapt to changing conditions. that is one reason that economic outcomes are very hard to predict, and why i am circumspect about predicting “ australia to 2020 ”. looking to the long run, we probably can make a few very general observations, but not much more. real income per head has generally been on an upward trend in industrial economies for the past 250 years, with occasional setbacks. most likely that will continue ( albeit that some major countries will take some time to recover their income levels of three years ago ). as a broad observation, and definitely not as a precise forecast, we might expect that a decade from now australia ’ s per capita gdp will probably be roughly 15 per cent higher in real terms than it is now, give or take a few percentage points. the economic policy arguments, by the way, will all be about what policies might gain or lose those few percentage points. in 2020, there will probably be, at a rough guess, an extra couple of million people working, compared with today ’ s 11. 3 million. but exactly how all those people working will earn their living and go about their work is considerably less predictable.

economy on an even keel. there are voices clamouring for special attention for their particular sector but we must not allow ourselves to go overboard. we must be prudent, we must make sure that the entire economic apparatus of mauritius, which has served us so well over the years, survives this crisis. * but we have not felt the full impact of the storm as yet. is there much that we can do to weather the impending storm? we are a completely open economy ; it was never on the cards for us to be completely immune from what is happening in the major economies, whether they are source markets for tourists or capital flows or destination markets for our exports. there was no question about our being immune … it was just a question of the leads and lags in the system catching up with us. if it seemed as if we had weathered it very well in the first round, it was only because the effects of the storm in our major markets had not yet worked themselves out in ways that matter to us : export orders or tourist flows or capital flows. as the slowdown became a recession elsewhere, the effects are beginning to be felt here. we feel that there is probably worse to come … the same drag in the system which immunised us on the way down will delay the transmission of the recovery on the way up. * when is that going to happen? that will depend on the time it is going to take for the measures adopted by the g20 to work themselves out and to begin to show up in rising investor and consumer sentiment in the major markets. till then, there won ’ t be any change in consumer spending or in capital flows which affect us, and we will not as a result see any improvement in our underlying conditions. that will only come when the consumers in western markets start buying our export products. or when the traveller starts travelling again to distant tourist destinations. or when the investor starts investing again in far - away markets. when is this going to happen? it ’ s anybody ’ s guess! there is at present very poor visibility a few months ahead ; forecasting right now has become a very dangerous thing. your paper last week quoted jk galbraith's quip about economic forecasting being an activity invented to make astrology look respectable. how true this is today! what we can say for sure is that the crisis is going to be over before long. exactly when … we don ’ t know. no crisis has lasted forever in