(Australian Associated Press)
A rising Australian dollar is slowing the country’s economic transition away from mining, an economist warns.
Chief economist at BIS Oxford Economics, Frank Gelber, says a weaker Australian dollar would help to rebuild non-mining sectors of the economy, like tourism, agriculture and education.
“The high dollar is impeding our structural change and the recovery of those industries that will replace mining,” Dr Gelber told a BIS Oxford Economics conference in Brisbane.
“Rebuilding is hard and building new industries is even harder, and in Australia that process has hardly begun.”
The Australian dollar was trading above $US1.00 in early 2013 before falling to around 68.6 US cents by early 2016, but its recent surge back above 80 US cents means it is still not low enough, Dr Gelber said.
The currency needs to be between 60 and 72 US cents to lift Australia’s competitiveness and aid the recovery of tourism and other economic sectors, he said.
“I’d love to see us at 60 US cents,” Dr Gelber told AAP.
“We are predicting it will be about 73 US cents in the next two to three years because we are expecting commodity prices to fall back again, not dramatically, but back to where they started.”