Australian manufacturing has a long road to recovery because of the high Australian dollar, said Reserve Bank of Australia board member Heather Ridout.“If we can see a sustained upturn in investment…we might say that we’ve made the adjustment, but I don’t think that is necessarily apparent yet,” Ms. Ridout, a former head of the Australian Industry Group, an umbrella group for business, told The Wall Street Journal.
Nasdaq reported, ‘manufacturing investment has been in sharp decline since the end of 2011, and fell 2.0% in the last quarter of 2012 in seasonally-adjusted terms, according to the Australian Bureau of Statistics’ estimates. As a share of the economy, manufacturing now stands at around 7%, down from 30% in the 1950s,’
The news report revealed that Ms. Ridout’s comments are in direct contrast with those of John Edwards, a colleague on the RBA board, who told the Journal recently that the manufacturing sector was coping well with the high Australian dollar, and no policy response from the central bank was required.
“Manufacturing has been facing very, very strong headwinds with the currency staying high for a sustained period,” she said. “The pressure to reduce costs is going to be unrelenting on the industry.”
The news comes after General Motors revealed Holden will be downsizing operations in both South Australian and Victoria, cutting up to 500 jobs.