, there are some quite encouraging signs at present of a turning point. in australia, the economy has clearly coped with the international downturn pretty well so far, and there are good reasons for confidence about its performance over the coming year. as it happens, the bank has just published a statement on monetary policy, containing our comprehensive analysis of the international and australian economies. my task today is to elaborate some of the themes in that document, rather than to bring any new messages. the us business cycle on 26 november 2001, the us national bureau of economic research announced that, according to the methodology they use for dating business cycles, the us economy had reached the end of a decade - long expansion in march 2001, after which it had been in a period of contraction. that pronouncement effectively ended the debate about whether there would or would not be a recession – defined by the nber as “ a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale - retail trade ”. one had apparently been under way for eight months. it is not that unusual, by the way, for such classifications of recession and expansion to lag the actual event by a good few months. in fact, it is not unknown for a recession to be actually finished by the time the data make it clear that one had begun ( though the fact that it had finished was itself, of course, not known until later ). this was the case in the early - 1990s recession in the united states. note also that there have not, as yet anyway, been two consecutive quarters of declining gdp in the united states – the definition of " technical " recession so beloved of the headline writers. debate quickly moved on, focusing briefly on the role of the september 11 events affecting the economy. clearly, those events did not cause the recession. all the dynamics typically associated with a contraction in output were in train prior to mid september – otherwise the nber would not have been able to decide by november that there was a recession under way. moreover, the direct impact of the attacks themselves was, despite the horrifying images, not all that large on the us economy. arguably, though, they came at a time when the us economy was already contracting and accelerated the adjustments by businesses to the underlying reality which was emerging. certainly, the event was a watershed for commentators. those voices saying there would not be a recession went quiet immediately,

glenn stevens : the economic outlook in 2002 address by mr glenn stevens, deputy governor of the reserve bank of australia, to ceda economic and political outlook conference, adelaide, 18 february 2002. * * * it is a pleasure to be invited to speak to ceda ’ s economic and political outlook in adelaide. i have taken part in ceda functions at this time of the year in other cities, but it is particularly nice to come to adelaide. i would like to note at the outset, for the benefit of the local audience, that the bank has undertaken a considerable increase in the resources put into " on the ground " economic intelligence around the country. during 2001, we established regional offices in victoria, western australia and queensland. in those states, the bank ’ s branches had earlier been closed because their original functions – banking and registry operations, currency distribution – were either no longer demanded by customers or had been overtaken by improved technology. the purpose of the offices is to retain some rba presence and, more fundamentally, to gather information about local economic conditions. in south australia, of course, the bank still has a presence in the form of a branch operation which conducts banking business for the south australian government. so as part of the process of strengthening our liaison effort, during last year we re - positioned one of our economists from head office to the adelaide branch. the local staff are in continual contact with the economic group in head office and they take an active part in the assessment of the economy in the preparation for the monthly board meetings. we have found the information gathered at the local level to be extremely helpful and are very grateful for the way businesses, government departments and agencies and other groups have responded to our questions. the south australian economy has turned in a reasonably strong performance over the past year, with growth in household demand running above the national average. in common with some of the other states, south australia ’ s export exposure no doubt means that businesses here will be keeping a watchful eye on events abroad. equally, the apparent intention of the mining sector to begin raising its capital spending, according to the available surveys, will probably be good for south australia. i do not intend to attempt a detailed analysis of local economic conditions. instead, most of my remarks will be about the global and national scenes. the world economy presents no fewer sources of uncertainty, and hence no less potential for surprises, than it has for a number of years now, though from the perspective of the international business cycle