Australia is likely to avoid a recession as the mining boom fades, the Reserve Bank boss says.
The economy fell into recession during the 1980s and early 1990s after a peak in commodity prices, but Glenn Stevens is confident history won't repeat.
Coal and iron ore prices have plunged in recent months and investment in the resources sector has waned as a result.
"If we come through this terms of trade event with neither a major outbreak of inflation in the upswing nor a major crash in the downswing, even if we have a period of sub-average growth in the process, we will have done far, far better than in any previous event of this kind, let alone one of this magnitude," he told an American Chamber of Commerce in Australia lunch.
"I still think that is the most likely outcome."
The RBA governor also said a falling Australian dollar would help the economy deal with the resources downturn, although not as seamlessly as hoped.
"We have always said we cannot hope to fine-tune this transition, however much we may wish otherwise," he said.
Meanwhile, Mr Stevens expects US interest rates will rise in 2015 for the first time in nine years, which along with bond buying by the European Central Bank, is set to shake up financial markets.
"There is likely to be some turbulence in asset and foreign exchange markets," Mr Stevens said.
"On the whole, though, I think we should regard the Fed's likely actions as a positive development.
"The punchbowl isn't being taken away, its contents are just being made a little less potent."
The US Federal Reserve's latest statement on monetary policy sparked a fall in the US dollar, and a spike in the Australian dollar, though that has subsided during overnight and Friday trade.
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