year ago of – 1 per cent. that is, the level of real gdp today is nearly 4 per cent higher than had been anticipated. for 2009 as a whole, we estimate that nominal gdp was about $ 45 billion higher than our forecast a year ago. measures of business confidence and conditions in most of the surveys carried out by private organisations have for some time been at levels that are suggestive of something like average rates of economic growth. the reserve bank is of course aware that the picture is not uniform across every region or industry. moreover, the upswing is likely to have particular features that mean that differences across sectors and regions may widen. not everyone will feel its benefits in the same way or to the same extent, though this is true of all economic cycles. but it does not in any way diminish those concerns to say that there has been a good outcome for the national economy in a difficult international environment. managing the upswing our task now is one of trying to ensure, so far as we can, that the new economic upswing turns out to be durable and stable. there are many factors about which we can do little. the speed and composition of global economic growth for example, or the behaviour of international financial markets as they grapple with uncertainty and risk – these and other factors may turn out to our benefit or detriment. we cannot change them ; we can only try to be alert to them, and maintain some capacity to respond to them. for the time being, at least, the global economy is growing again. forecasters expect an outcome something like trend global growth in 2010 and 2011, which is much better than 2009 but not as strong as 2006 or 2007. those were exceptional years for growth and that pace could not have been sustained for long, even absent the crisis. in the region to which the australian economy is closely linked, growth has been very strong over the past year. almost certainly it will need to slow somewhat in the coming year. demand for natural resources has returned and prices for those products are rising. we have all read of the recent developments in contract prices for iron ore. as a result of those and other developments, australia ’ s terms of trade will, it now appears, probably return during 2010 to something pretty close to the 50 - year peak seen in 2008. as usual with these things, we cannot know to what extent this change is permanent, as opposed to being a temporary cyclical event. however, the fact that we will

degree of formal co - ordination – for example, most g10 central banks reduced their interest rates by 50 basis points on 8 october 2008. beyond that there was a fairly consistent set of responses stemming from a common assessment of the seriousness of the potential threat. so the global downturn could have been much worse than it eventually was, but policy makers everywhere supported financial systems where needed, eased monetary policy and eased fiscal policy, to support demand. the responses, by and large, were quite quick. in the countries at the centre of the crisis, these policy efforts have borne fruit. but they have been working against the powerful headwinds of private sector de - leveraging. hence in those cases the recovery thus far has been quite hesitant. economic activity remains well below the peak level seen in 2007 or 2008, and in some of these economies it may not regain that level for another year or two. it is in this sense, actually, that the downturn in parts of the advanced world may well turn out to be the most costly in generations : the forecast slowness of the recovery implies a very large cumulative amount of lost income in some cases. in other episodes of serious recession, once conditions for recoveries were in place, they proceeded quite strongly. people are not confident of those sorts of outcomes this time ( indeed many forecasters and financial markets will be seriously wrong - footed if a rapid recovery in the crisis - hit countries does occur ). observers in some countries even wonder whether their trend growth rate may have been impaired for a lengthy period by what has occurred. but most countries did not have a bank solvency crisis. they had an acute liquidity crisis for a couple of months in september and october 2008 when the global financial system went into cardiac arrest, but thereafter those problems began to ease – mainly due, it must be said, to actions of governments and central banks in the major countries. since in most countries banking systems were generally sound, the headwinds have not been blowing as strongly in asia or latin america as in some other regions. accordingly, the policy stimulus applied in these countries appears to have been pretty effective in supporting demand. once money markets and trade finance began to thaw, recovery proceeded at a very strong clip. in east asia outside japan and china, industrial production is now a little above its previous peak. in china, it surpassed the 2008 peak in the middle of last year and kept rising, while in india it never really fell. despite the slow growth of