Investing.com - The weak commodity price cycle now in play creates uncertainty for Australia's economy and the impact of slower China demand will cause a re-balance that is far from predictable, Reserve Bank of Australia Assistant Governor Christopher Kent said Tuesday.
"The easing in the growth of the Chinese economy over the past year or so has two related parts," Kent said at the inaugural UBS Australasia Conference 2015 at Sydney. "The economy is slowing as it matures and this is to be expected. Overlaying that there has been a substantial slowing in the industrial sector linked in part to earlier excesses in construction," Kent said.
"How all of this will play out and the effects on the Australian economy are uncertain," Kent said. However, many of these effects have positive implications for the Australian economy.
He said the industrial sector in China, and in Asia more broadly, will have an important influence on the path of commodity prices.
"Beyond that the changing nature of China's development implies that the potential for commodity prices to rise from here is somewhat limited," Kent said.