RBA says GFC timing was 'lucky'

AUSTRALIA was lucky the global financial crisis hit when it did, Reserve Bank governor Glenn Stevens says.

While it is a commonly held view that Australia was lucky to have the mining boom and record growth in China to support its economy, Mr Stevens said the timing of the global slowdown was equally fortuitous.

If not for the GFC, Australia would be in a much worse position as it attempts to navigate the current period of weaker economic growth, Mr Stevens told a business function.

He said the GFC helped to reduce inflation from around five per cent to a more acceptable level of around 2.5 per cent.

The fallout from the sub-prime mortgage crisis in the US also prevented Australia from taking on more risky lending practices, Mr Stevens said.

"Although such lending was less prominent in Australia at that time, it was growing fast and would have become a much bigger vulnerability had it continued at that pace," he said.

"The fact that things went wrong in the US when they did meant that what was a small problem here stayed small."

With mining investment expected to start to decline in the next year or so, Mr Stevens said other parts of the economy would have to pick up.

Business investment, which has remained very weak in recent years, was likely to pick up over the next few years, he said.

Conditions were also likely to improve in the housing sector, Mr Stevens said.

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