SYDNEY, Nov 20 (Reuters) - Australia's economy continues to grow at a sub par pace but has still fared relatively well given the huge swings in its terms of trade in recent years, a top central banker said on Friday.
In a typically upbeat speech, the Reserve Bank of Australia's (RBA) head of economic analysis Alex Heath said the long decline in the local dollar had boosted net service exports to levels where they were adding as much to economic growth as its giant resources sector.
Unemployment had also been lower than expected thanks to a flexible labour market and subdued wages growth, she added.
The surprising strength of employment was one reason the central bank opted not to cut interest rates again at its policy meeting this month.
"While current growth in the Australian economy is not as strong as we would like, the evidence from previous terms of trade cycles suggests that we have actually done quite well in aggregate," said Heath.
Australia enjoyed a huge boom in its terms of trade between 2003 and 2012 as prices for its commodity exports surged on the back of Chinese demand. That then reversed course as new resource supply came on stream and the Chinese economy cooled.
Heath estimated that, in all, the boom phase in commodity prices added around 13 percentage points to household disposable income.
However, there was "considerable uncertainty" about where the terms of trade would head from here, particularly as there was no proven way to accurately predict future commodity prices, she added.