( non - mining ) capital stock should kent, c ( 2014 ), “ non - mining business investment – where to from here? ”, address to the bloomberg economic summit, sydney, 16 september. bis central bankers ’ speeches be lower than it otherwise would be ( as a share of that economy ). 9 however, that doesn ’ t imply that gdp growth will be lower, nor does it suggest that the economy will be a less prosperous one. what matters for these things is whether we are taking advantage of profitable opportunities and using labour and capital in the most productive ways that we can. also, it is worth emphasising that many services require high levels of human capital – in the form of education and training – which does not get picked up in investment as measured by the national accounts. graph 9 investment today might also be lower ( as a share of nominal gdp ) than in the past for another reason. over time there has been a sizeable decline in the price of many types of machinery and equipment ( particularly those related to information and communications ). so, businesses are able to spend less to obtain a given level of capital services. for example, they can purchase a lot more computing power for a given level of nominal spending. once again, if this leads to lower investment ( as a share of nominal gdp ) than in the past it does not imply less output growth or lower prosperity. indeed, given that australia imports much of our machinery and equipment, a lower price of that capital is to our benefit. conclusions the major advanced economies are in different stages of the business cycle. the recovery from recession is well established in the united states, but has a long way to go in the euro area. japan has made some progress in reducing the extent of spare productive capacity, but inflation is still some way from the bank of japan ’ s target. nevertheless, growth of this is not to say that there hasn ’ t been a deepening in capital over time – that is, more capital per worker in both goods and services sectors. rather, for a given increase in the number of workers, we need less investment just to keep the capital - to - labour ratio constant if a greater share of those workers are in the services sector than in the past. bis central bankers ’ speeches australia ’ s major trading partners has actually been around average for some time now and, as best we can tell, it is likely to remain at that rate in the year ahead. australian gdp growth has been a bit

christopher kent : the business cycle in australia address by mr christopher kent, assistant governor ( economic ) of the reserve bank of australia, to the australian business economists ( abe ), sydney, 13 november 2014. * * * i thank natasha cassidy, vanessa crowe, emma doherty, craig evans and thomas mathews for help in preparing these remarks. introduction i ’ d like to thank the australian business economists for the invitation to speak here today. it ’ s not surprising that after a period of sub - par growth in many parts of the world, we often hear the term “ recovery ” in discussion of current economic conditions and future prospects. for economists, the term recovery fits within the realm of business cycle analysis. at one extreme, it implies that the economy is near a low point in the cycle with the prospect of much better conditions ahead. a less extreme case would be one where growth has been below its trend ( or potential ) pace for a time, leading to a rise in unemployment and spare productive capacity more generally. in both cases, a period of above - trend growth would be required to reduce the unemployment rate and make use of that spare capacity. in my discussion today, i want to consider the extent to which either of these descriptions might be warranted, both here and offshore. this requires an assessment of where the economy has been, where it is now and where we think it is likely to be in the future. the first two parts of this are not always straight forward, and as for the third, the bank regularly highlights the fact that forecasting is difficult and imprecise. 1 also, conditions can vary somewhat across different parts of the economy. this is especially true of the australian economy right now given the differences between the mining and non - mining sectors and some resulting variation in conditions across the states. state of the global economy let ’ s start with a consideration of the state of the global economic business cycle. in terms of australia ’ s real economy – by which i mean the production, trade and consumption of goods and services – what matters on the global front is the strength of our major trading partners. this can be measured by combining the growth of each of our trading partners using australia ’ s export shares as weights ( graph 1 ). according to this measure, activity rebounded in 2010, following the worst of the global financial crisis. since then, overall growth of australia ’ s major trading partners has actually been relatively stable at close to its long - term average. in large part