Australia must prepare as early as now for the end of the mining boom or else feel the wrath of internal and external pressures on the monetary and fiscal situation of the country, Reserve Bank Governor Mr. Glenn Stevens said today.

Addressing a business forum at Parliament House in Canberra Monday, Stevens said that the country's trade and current account surplus will not always be as high as it is now and the central bank is eager to prepare for this challenge.

He noted that this is again a challenge that need be looked at as an opportunity, but to some point the Australian economy will still make the necessary adjustments.

"Trade will not remain as high as they are now and that will test the central bank, the Federal Government and industry," Mr. Stevens said.

Maintaining a balanced economy for Australia, whose per capita GDP in 2020 will be no less than 15 percent higher than it is today would be one of the main hurdles.

"The economy will adjust to that and that is usually fraught with a certain degree of tension and stress in some sectors," he said.

"It's unavoidable and we should be devoting our energies to helping the adjustment occur smoothly, but nonetheless adjustment has to occur," Stevens warned.

Exchange rates

In spite the strong comeback of the Australia dollar and almost reaching parity with the US dollar, Mr. Stevens reminded that "the flexible exchange rates regime is not the panacea to global economic reforms."

"We should be realistic about how much difference exchange rate flexibility would make to the unbalanced nature of growth in the global economy," Stevens said in prepared remarks in Canberra today. "It is definitely part of the answer (and it is surely in the interests of the countries with closely managed rates to accept more flexibility), but it is no panacea."

Mr. Stevens said "flexible exchange rates alone won't spur growth or rebalance the global economy, even as stronger currencies in emerging Asian nations such as China would help cool asset prices."

After attending the Group of 20 finance ministers and central bankers meeting in South Korea, Mr. Stevens said although most have vowed that weakening of currencies will be rid off to ease trade tensions, he took note of rising asset prices in China.

Deferring his comment on Australian property prices skyrocketing, Mr. Stevens said "allowing exchange rates to appreciate more quickly would probably help to dampen increases in asset prices."