Andrew Hauser: The ghost of Christmas yet to come

Speech by Mr Andrew Hauser, Deputy Governor of the Reserve Bank of Australia, at the Australian Business Economists' Annual Dinner, Sydney, 11 December 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
16 December 2024
by Andrew Hauser
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  |  16 pages

Introduction

It is a pleasure to be here. My theme tonight is trade – so it is fitting that we are meeting on George Street, which is said to lie on an ancient trading route between farmed grasslands to the south and the fresh fish and water here in the harbour. In that context, I would like to acknowledge the Gadigal people of the Eora Nation as the traditional owners and custodians of this land and pay my respects to Elders, past and present.

This is my first festive season in the Southern Hemisphere – and while there have been many reminders this year of why being asked to move from the UK to Australia was such a privilege, few perhaps beat the prospect of seeing in the New Year in temperatures of 25–30o C while my former colleagues at the Bank of England scrape frost off windscreens and thaw frozen pipes. The contrast in terms of sunshine is starker still: indeed, London seems barely to get light at all at this time of year (Graph 1).

It was this cold, dark British version of the festive season – not the sun-drenched Australian alternative – that Charles Dickens described in A Christmas Carol. In one of the most dramatic scenes, the Ghost of Christmas Yet to Come shows the miserly Ebenezer Scrooge a nightmarish vision of his own future, in which he dies alone and unloved, without friends or family, his possessions stolen and sold for scrap.

Some commentators fear a similar fate for the world economy in 2025 if the United States triggers a tit-for-tat trade war with China and other countries. In that hypothetical scenario, the worry goes, economic activity would fall and prices would rise across the world – including here in Australia – as global supply chains are disrupted, leading to weakened competition, productivity and innovation.