seems to be some way away. in time, though, we should expect that the adjustments that we have seen in the cyclical variables – the exchange rate, the labour market and interest rates – will help create the environment that leads to increased investment. but there are clearly limits here. a low exchange rate, low growth in wages and low interest rates are not the basis for sustained increases in investment and output. they can certainly help during the adjustment phase, but ultimately we will be better off if increased investment is driven by high expected returns rather than by the low cost of finance or low wages. this is why the focus on improving the climate for business investment is so important. there is no magic bullet here, but surely the investment climate would be improved through a strong focus by both business and government on innovation, productivity, human capital and entrepreneurship, topics that i have spoken about on previous occasions. thank you and i would be happy to answer any questions that you might have. bis central bankers ’ speeches graph 1 graph 2 bis central bankers ’ speeches graph 3 graph 4 bis central bankers ’ speeches graph 5 graph 6 bis central bankers ’ speeches graph 7 graph 8 bis central bankers ’ speeches graph 9 graph 10 bis central bankers ’ speeches graph 11 bis central bankers ’ speeches

##ity that has taken place as the chinese authorities have sold foreign exchange reserves in response to private capital outflow from china. the depreciation of the renminbi against the us dollar can also be expected to provide some support, at the margin, to the chinese economy. so, overall, it is a complicated picture at present in australia ’ s largest single trading partner. we became used to extraordinarily strong growth in china and now we are having to get used to something a little less extraordinary, and we are also being reminded that china too has a business cycle. nevertheless, it remains the case that there are still significant mutually beneficial opportunities from deeper economic relations between australia and china. as a nation, we need to keep an eye on these opportunities, while, at the same time, understanding and managing the associated risks as best we can. elsewhere, the recent economic data have mostly had a slightly more positive tone. the us economy is recording above - average growth and the unemployment rate is around most estimates of full employment. in europe, the economic news has recently tended to be a bit better than it had been earlier in the year and a recovery, of sorts, is taking place there. in india, too, the growth momentum looks to have improved, although in a number of countries in east asia, both domestic demand and export growth have slowed. for the globe as a whole, economic conditions continue to be supported by the decline in oil prices. in addition, the drag from fiscal consolidation has lessened in several countries. monetary conditions also remain very accommodative. at some point before too long, we should hope that the us economy is sufficiently strong for the federal reserve to begin the process of normalising interest rates there. a stronger us economy should be good for the rest of the world, although financial market developments will need to be watched carefully given that the policy interest rate in the united states has been at zero for almost seven years now. putting all this together, when the rba published its latest forecasts a bit over a month ago, we were expecting gdp growth in our trading partners to be around average over the next couple of years ( graph 5 ). while recent news on global industrial production has been softer, on balance, the recent data have not changed this general outlook materially. we still expect gdp growth in our trading partners to average around 4 per cent over 2015 and 2016, although given recent developments in east asia the risks around this central forecast are