2     Tasmanian Economy

Key Issues

·       The Tasmanian economy is forecast to grow by 2½ per cent in 2015‑16, following an estimated growth of 1¾ per cent for 2014‑15.

·       There has been an improvement in a range of key indicators over the past year, following an extended period of weak economic activity, although the recovery has been uneven across the State. In particular, the labour market has improved significantly since late 2013. Part of this improvement has been driven by the tourism industry, with record visitor numbers and high levels of spending contributing to increased employment in tourism‑related industries.

·       Business confidence has been high in recent months, with Tasmania recording higher levels of business confidence than nationally. Several major commercial investment projects are underway, with other major projects set to commence.

·       The impacts of record low interest rates and State Government support for first home builders are reflected in a recovery in dwelling investment. Forward indicators suggest that this growth will continue through 2015‑16.

·       The devaluation in the Australian dollar is providing support to the State's exporting industries, including in the horticulture sector where export volumes have started to increase. Overall, however, export volumes have continued to decline, due partly to the weaker mining industry in Tasmania.

·       Tasmania's population growth has been below trend, but is expected to increase marginally as the gap between Tasmanian and national economic conditions narrows.

·       Employment is forecast to increase by a total of 3¼ per cent over the two years of 2014‑15 and 2015‑16. The unemployment rate is forecast to be 6¾ per cent in year‑average terms in 2015‑16, down slightly from an estimated 7 per cent in 2014‑15.


Current Environment ‑ Overview

Global Conditions

The global economy generally improved through 2014, although some advanced economies experienced some unexpectedly weak results in the latter half of the year. The International Monetary Fund (IMF) has recently forecast global economic growth of 3.5 per cent in 2015 and a modest increase to 3.8 per cent in 2016, driven by developing economies. The risks to the outlook are considered to be more balanced than has been the case in recent times. Advanced economies are forecast by the IMF to grow by 2.4 per cent in each of 2015 and 2016, though the performance of these economies is expected to remain uneven. The IMF forecasts emerging and developing economies to grow by 4.3 per cent in 2015 and by 4.7 per cent in 2016 and has identified population ageing and lower investment and productivity growth as constraints on global economic activity.

The outlook for Asia as a whole, which accounts for around three quarters of Tasmania's international exports, continues to be strong. China is growing at less than the very strong growth of the past decade, though the size of the Chinese economy and its high growth rate, relative to other major economies, means that it remains a dominant driver of growth in Asia and globally. The Chinese government has set a lower growth target for China's economy, at 7 per cent for 2015, and is seeking to rebalance the economy away from investment projects and towards service industries and other industries that are benefiting from expanding household income. The outlook for Japan's economy remains weak due to weak household spending. Several other Asian countries, including Malaysia, Indonesia and India continue to experience strong growth rates.

Growth in the European Union was modest in 2014, and its prospects are generally considered to be weak. By contrast, the United States economy continues to expand above the average pace of advanced economies, with strong domestic demand leading to increased investment and falling unemployment. The IMF expects growth in the United States to be 3.1 per cent for both 2015 and 2016.

Despite these generally favourable economic conditions, the prices of many of Australia's and Tasmania's key export commodities remain weak. This reflects increased global supply in response to the previous very high prices, and, in some cases, lower demand such as from China where the rate of industrialisation has been easing.

Monetary policy remains highly accommodative in advanced economies. This has contributed to very substantial gains in equity values and extraordinarily low long‑term government bond yields. It is uncertain what the implications of this monetary policy will be on global economic conditions when interest rates inevitably increase over the longer‑term.


Australian Conditions

Australia's economy continues to outperform many advanced economies, but growth has been below trend and has been easing further in recent quarters. The Australian economy continues to adjust to the winding down of the mining investment boom, compounded by significant weakness in the prices of some mineral commodities. The effect of this transition has been cushioned by strong growth in the volume of resource exports and a recovery in dwelling investment.

The value of the Australian dollar has been volatile against key currencies and has fallen substantially in recent months, particularly against the US dollar. A recovery in the prices of some key commodities, such as iron ore and coal, would put upward pressure on the Australian dollar.

The Australian labour market in the past year has not performed as strongly as in recent years. Employment growth has been weak, and has not quite kept pace with the growth in the working age population, leading to an increase in the national unemployment rate. Some of this increase in unemployment has been due to lower demand for workers in the resource-rich jurisdictions.

Nationally, consumer confidence has been below average according to most surveys and, according to some, is trending downwards. Households are reporting increasing concerns over job security. Business confidence is also subdued according to the National Australia Bank's Monthly Business Survey, falling further below the long run average level in the first quarter of 2015. Businesses in many industries are reporting weak demand and have not, to date, reported any major benefits from the lower Australian dollar. Many businesses in the resources sector remain concerned over low commodity prices.

The Reserve Bank of Australia (RBA) has lowered the cash rate over the past year, most recently in May 2015, to 2 per cent which is a record low, during which time core inflation has been well within the Reserve Bank's target band. The RBA stated in May 2015 that the key constraint on private demand in Australia is likely to be weakness in business capital expenditure in both the mining and non‑mining sectors, and also that public spending is scheduled to be subdued.

In its most recent World Economic Outlook, the IMF has forecast economic growth of 2.8 per cent for Australia in calendar 2015 and 3.2 per cent for 2016, which is close to trend. The Australian Treasury, in the 2015‑16 Budget, estimates national growth of 2½ per cent in 2014‑15 and forecasts marginally higher growth of 2¾ per cent in 2015‑16. The national unemployment rate is forecast to be 6½ per cent by the June quarter 2016 according to the Australian Treasury.

Economic Outlook

Table 2.1 presents Treasury's estimates for key Tasmanian economic indicators for 2014‑15, forecasts for 2015‑16 and projections from 2016‑17 to 2018‑19.

Changes in gross state product are derived from component‑based estimates of household consumption, private investment, government spending and net exports. This approach seeks to estimate movements in the same measures that the Australian Bureau of Statistics (ABS) reports in its Australian National Accounts.

Table 2.1:          Tasmanian Economic Estimates, Forecasts and Projections






Budget 2015‑16





























Gross State Product2,3







State Final Demand2,3













Labour Force Participation Rate4










Unemployment Rate4






Consumer Price Index (Hobart)3
























Source:       Data ‑ ABS; Estimates Forecasts and Projections ‑ Treasury.


1.   The Revised Estimates Report 2014‑15, which was released on 11 February 2015.

2.   Real, percentage change.

3.   Year‑average, percentage change.

4.   Year‑average, percentage level.


The projections over the period 2016‑17 to 2018‑19 contained in Table 2.1 are not forecasts. They are based on the long‑term averages for each of the indicators and do not take into account the potential impact of any future economic events or policy changes by the State or Australian Governments.

Summary of 2014‑15 Estimates and 2015‑16 Forecasts

Tasmania's state final demand is expected to grow by 2¼ per cent in 2014‑15. Household spending has been the main driver of state final demand over the first half of 2014‑15 and this is expected to continue over the year. Both business and dwelling investment have been increasing modestly since 2013‑14 and further gains are anticipated over the second two quarters of 2014‑15. Against this, public spending has been easing, due to lower public investment by all levels of government to the December quarter 2014. Some recovery in public spending by the State Government is likely in the second two quarters of 2014‑15.

The real volume of overseas exports is expected to decrease over 2014‑15, based on the export data to date and the significant reduction in copper exports arising from the suspension of mining at the Mount Lyell mine. Largely due to this weaker export performance, Tasmania's gross state product is expected to grow by less than state final demand and increase by 1¾ per cent over 2014‑15.


Inflation has been particularly low in Tasmania over the first three quarters of 2014‑15, partly reflecting the decline in petrol prices and in electricity prices as a result of the removal of the carbon price. The declining growth in private sector wages has also contributed to lower price increases. The Hobart Consumer Price Index is expected to increase by 1¼ per cent over 2014‑15, around half the average growth of the past decade of around 2.5 per cent.

For 2015‑16, further strengthening of the Tasmanian economy is expected. Economic growth is forecast to be stronger, again driven by private demand with business investment and dwelling investment both forecast to increase by more than in 2014‑15. Some contribution to gross state product growth is expected from overseas exports and from public spending with the ramping up of public investment.

Inflation is expected to rise to 2¼ per cent in 2015‑16, as the factors that drove down inflation in 2014‑15 are not expected to apply. This forecast is marginally below the most recent forecast of the national inflation rate by the Australian Treasury of 2½ per cent for 2015‑16.

Over the two years of 2014‑15 and 2015‑16 employment is expected to increase by a total of 3¼ per cent. Based on the official ABS labour force data, which have been very volatile over the past year, and also due to the base effects arising from year averaging, this appears as a 2¾ per cent increase in 2014‑15 and a ½ of one per cent increase in 2015‑16. The forecast of employment growth over 2015‑16, if steady throughout the year, results in an additional 2 400 persons employed by June 2016.

The unemployment rate in Tasmania is closer to the national rate than a year earlier and a year‑average rate of 7 per cent is now expected over 2014‑15, declining marginally to 6¾ per cent over 2015‑16.

Some modest further growth in Tasmania's population to 0.5 per cent is expected in 2015‑16 as interstate migration flows adjust to the improvement in labour market conditions in Tasmania, relative to mainland Australia.

Tasmania's Economic Outlook

Gross State Product and State Final Demand

Tasmania's prospects for economic growth, as measured by gross state product, are more encouraging than in recent years. Private demand has been increasing and the prospects are encouraging for the tourism sector and some primary industries, such as horticulture and dairy. The sharp decline in Tasmania's manufacturing, which had detracted from economic growth in recent years, appears to be largely ended. The health care and social assistance industry continues to expand and business confidence has been very high recently, which suggests that the outlook for investment and increased economic activity is positive.

Against this, Tasmania's low population growth rate, relative to the national average, constrains economic growth in the State. In addition, Tasmania's ageing population, and its large share of those aged 65 years and no longer in the workforce, impacts on household spending. The mining sector continues to struggle, with the winding down of the Henty gold mine and with the Mount Lyell copper mine still operating on a care and maintenance basis. The decline in the Australian dollar, if sustained, is likely to assist the mining sector.

Gross state product in Tasmania is expected to increase by 1¾ per cent in 2014‑15 and is forecast to grow above the long‑term trend rate at 2½ per cent in 2015‑16.

Chart 2.1:          Gross State Product, Tasmania

Title: Chart 2.1: Gross State Product, Tasmania - Description: Contains the Gross State Product for Tasmania for each year from 2006 07 to 2018 19, showing actual data from 2006 07 to 2013 2014, a projection/forecast for 2014 15, and projections for 2015 16 to 2018-19.
This chart demonstrates that Gross State Product in Tasmania is expected to increase by 1¾ per cent in 2014-15 and is forecast to grow above the long-term trend rate at 2½ per cent in 2015-16.

Source:       Australian National Accounts: State Accounts, ABS Cat No 5220.0; Treasury forecasts and projections.


Tasmania's state final demand, a measure of spending within the State, increased slightly in each of the past seven quarters, but remains around 1.9 per cent below the recent peak level recorded in mid‑2011. State final demand is expected to grow at 2¼ per cent in 2014‑15, which is around the trend level, and by 2½ per cent in 2015‑16.

The key elements of Tasmania's gross state product are set out in more detail through the remainder of this chapter.

Household Consumption

Household consumption is the net expenditure on goods and services by households. Since mid‑2013, household spending has grown at a pace at or above the average quarterly trend growth rate, supported by improving labour market outcomes, increased levels of consumer confidence and a supportive interest rate environment.

The growth in Tasmania's tourism sector has been stimulating consumption spending in the State. According to the Tasmanian Visitor Survey, visitor numbers were three per cent higher in the year to December 2014 compared to the previous year, at a record 1 068 100 persons and visitor expenditure increased by 11 per cent to $1.8 billion.


The value of personal finance commitments in Tasmania has been increasing in recent months. This suggests generally households are more confident to borrow to fund their expenditure, some of which is likely to be related to the growth in dwelling investment as the demand for white goods and other dwelling‑related items tends to be high when the housing market is strong. Household spending is expected to continue to grow in 2015‑16 at around the long‑term trend.

Private Investment

Private investment in Tasmania comprises a smaller share of final demand than nationally and the current level is still well below the levels of 2008, prior to the global economic downturn. In part, this is because the decline in Tasmania's manufacturing, mining and forestry‑related industries has resulted in lower levels of ongoing investment in plant and equipment in these industries. By contrast, expanding industries such as health care and social assistance and some in the tourism sector tend to be less capital intensive and generally require lower levels of ongoing capital investment.

The focus of business investment in Tasmania is now towards commercial, rather than industrial, developments, with some major investments including the Myer site redevelopment and the parliament square project in Hobart and the Silo Hotel and Penny Royal developments in Launceston.

The business investment outlook is mixed across the State. Some very high value developments are currently underway in the Hobart area, which is also benefitting from some very large public infrastructure projects. In the Northern region, business investment is providing support to the construction industry, including through some medium‑sized projects, but not to the same extent as in the South.  By contrast, investment is relatively weak in the North West of the State, where there has been some major downsizing of operations, such as at Caterpillar in Burnie, and there is ongoing uncertainty over the prospects for several small and large mines.

Business confidence indicators in Tasmania have been strong in recent months, particularly in the agriculture and tourism‑related industries. Several industries are benefitting from the more favourable external trading environment, which includes not just the lower exchange rate but also increased access to some markets arising from free trade agreements and other internationally agreed arrangements. This is likely to support business investment in the medium‑term.

Dwelling investment in Tasmania has increased in recent quarters, as anticipated in the 2014‑15 Budget Papers. Forward indicators of dwelling investment, such as residential building approvals and housing finance, have improved in year‑average terms and rental vacancy rates have decreased. This momentum is expected to be sustained over 2015‑16.

The Government's First Home Builder Boost, which has been supported by low interest rates, has been highly effective in stimulating dwelling investment, with over 1 000 grants paid since the scheme commenced in November 2013. There is a substantial pipeline of housing construction contracts arising from the initial $30 000 grant, which will result in strong investment levels over the remainder of 2014‑15 and into 2015‑16. The Government's decision to extend the $20 000 grant from June 2015 to December 2015 will provide some further stimulus to dwelling investment over 2015‑16 and the following year. Across the State, the take up has been relatively higher in the South and the North than in the North West.

Government Expenditure

Government expenditure in Tasmania includes Australian, State and Local Government consumption and investment spending. This expenditure accounts for a larger share of Tasmania's final demand than nationally. Proportionate changes in government expenditure therefore have a larger impact on Tasmania's economy than nationally.

Total public spending in Tasmania has been steadily decreasing over the past year, continuing the trend since early 2010. This reflects, in part, the fiscal pressures faced by the Australian and State Governments and, to a lesser extent, in the local government sector.

Public spending is also influenced by the timing of major capital projects; this accounts for the decline in government expenditure in Tasmania in the first two quarters of 2014-15. The commencement of the University of Tasmania accommodation projects in Hobart and Launceston and the resumption of activity on the Royal Hobart Hospital redevelopment are expected to reverse this trend for the remaining quarters of 2014‑15.

For 2015‑16, modest growth in total government expenditure is forecast, supported by increased public investment by the State Government. Public investment by the State Government is expected to support around 2 500 jobs in the construction sector over 2015‑16. Further information on this general government infrastructure can be found in chapter 6 of this Budget Paper.


Tasmania's international export sector has faced very challenging conditions over the past decade. In recent years, the value of Tasmanian international merchandise exports has been falling due to decreased mining activity, a smaller manufacturing and forest products sector and weaker export prices, including zinc, aluminium and iron ore. Most recently, the nominal value of Tasmania's exports was estimated at $2.55 billion in the year to March 2015, down 8.0 per cent from the previous year and well below the peak of $3.8 billion in the year to August 2007.

In volume terms, export activity has been declining and is less than 20 per cent of the level of five years ago according to the ABS (Chart 2.2). While Treasury has some concerns over how Tasmania's international export levels are estimated by the ABS, it is clear that the recent trend has been unfavourable and that this has detracted from Tasmania's economic growth, unlike the trends at the national level, where Australia's strong export performance has provided a very substantial contribution to national economic growth.

Chart 2.2:          Real International Exports, Tasmania and Australia

Title: Chart 2.2: Real International Exports, Tasmania and Australia - Description: Contains the index of real international exports in 2012 13 prices for Tasmania and Australia on a quarterly basis from 2010 to the end of 2014.
This chart demonstrates that, in volume terms, export activity has been declining and is less than 20 per cent of the level of five years ago.

Source:  Balance of Payments and International Investment Position, ABS Cat No 5302.0


Around three quarters of Tasmania's international merchandise exports, by value, are to Asian countries, with China (including Hong Kong) accounting for just under a third. Export sales to China declined in the year to March 2015, driven largely by a decrease in the sales of metallic ores.

Tasmania's international export sales are expected to be relatively subdued in the near‑term due to weaker export prices for milk products and iron ore, the loss of output at the Mount Lyell copper mine and the winding down of the Henty gold mine.

The medium‑term prospects are more promising. The recent decline in the value of the Australian dollar against most currencies, and especially the US dollar, has boosted the competitiveness of Tasmania's export sector. On a trade weighted basis that reflects Tasmania's export mix, this decline has been around 14 per cent over the past three years, which compares with a decline of around 25 per cent against the US dollar.

For some of Tasmania's key commodities, the support from the lower exchange rate has been sufficient to outweigh the decline in global prices. An example is illustrated in the chart below, which shows that over the past nine months, the Australian dollar price for zinc has increased while it has fallen in US dollar terms. The zinc price in US dollars was almost 7 per cent lower in April 2015 than in April 2010, yet it was around 12 per cent higher than in April 2010 in Australian dollar terms. This was also the case for tin. Even for these commodities, however, unit production costs may have risen by more than the Australian dollar prices over this period.

By contrast, in the case of iron ore, the decline in price of around 67 per cent in US dollar terms between April 2010 and March 2015 was so great that the depreciation of the Australia dollar was only able to reduce this decrease to around 60 per cent. The price of aluminium and milk powder, two other important exports from Tasmania, were also lower in Australian dollar terms in April 2015 than in April 2010.

Chart 2.3:          Movements in Zinc Prices ‑ Australian and US Dollars

Title: Chart 2.3: Movements in Zinc Prices - Australian and US Dollars - Description: Contains the movement in zinc prices in Australian and US dollars per tonne on a monthly basis between April 2010 and April 2015.
This chart illustrates that over the past nine months, the Australian dollar price for zinc has increased while it has fallen in US dollar terms. The zinc price in US dollars was almost 7 per cent lower in April 2015 than in April 2010, yet it was around 12 per cent higher than in April 2010 in Australian dollar terms

Source:  Index Mundi; Oanda; Reserve Bank of Australia


The expansion of the Tasmanian Freight Equalisation Scheme to include international exports shipped through mainland Australian ports from January 2016 will provide further support for Tasmanian international exporters. Further export growth is expected from the expansion of the horticulture and dairy industries, which are heavily export oriented. Several primary sector exporters are benefiting from recent free trade agreements and other opportunities for greater access to overseas markets, particularly in Asia.

International merchandise exports, in volume terms, are forecast to return to modest growth in 2015‑16.

Exports of goods to mainland Australia account for a larger share of Tasmania's gross state product than Tasmania's international exports, though it appears that some exports classed as interstate exports by the ABS are destined for overseas markets. These interstate exports tend to grow in line with Australia's economy and are therefore expected to increase in 2014‑15 and in 2015‑16.

Labour Market

The Tasmanian labour market has shown underlying improvement since 2013 after an extended period of weakness and the levels of both part‑time and full‑time employment are higher than a year earlier. Treasury's employment estimates and forecasts are based on official ABS labour force data. The ABS estimates of employment levels in seasonally adjusted terms, and of the levels of aggregate hours worked, have been volatile and have included some very high levels in late 2014.

For the two year period of 2014‑15 and 2015‑16, employment is expected to increase by 3¼ per cent. The volatility in recent data and the use of year‑average estimates, where the results are very sensitive to the end of year employment level, generates an estimate of 2¾ per cent employment growth in 2014‑15 and a growth forecast of a ½ of one per cent in 2015‑16, even though employment growth through 2015‑16 is forecast to be at the long‑term trend rate of around one per cent. If employment grew at a constant rate throughout 2015‑16, this would result in around 2 400 more persons employed in June 2016 than in June 2015.

Tasmania's unemployment rate was 0.5 of a percentage point lower in April 2015 than a year earlier, in trend terms. Tasmania's unemployment rate is estimated to be 7 per cent over 2014‑15, falling to 6¾ per cent in 2015‑16 and the out‑years, based on long‑term trend growth in employment.

Chart 2.4:          Unemployment Rates, Tasmania and Australia

Title: Chart 2.4: Unemployment Rates, Tasmania and Australia - Description: Contains the unemployment rate for Tasmania and Australia on a monthly basis 2007-08 to 2015-16 with actuals for 2007 08 to 2013 14, estimates for 2014 15 and forecasts for 2015 16.
This chart shows that Tasmania's unemployment rate is estimated to be 7 per cent over 2014-15 and is forecast to fall to 6¾ per cent in 2015-16, drawing to within 0.5 per cent of the national unemployment rate.

Source:  Labour Force, Australia, ABS Cat No 6202.0; Treasury forecasts and projections; 2015‑16 Budget, Australian Treasury.

The ABS estimates of Tasmania's participation rate have also been volatile over the past year. Based on these data, Tasmania's participation rate is expected to be 61 per cent over 2014‑15. The participation rate is forecast to decline to 60¾ per cent in 2015‑16, consistent with more recent levels, and is projected to remain at that level over the medium‑term. The gap between the Tasmanian and national participation rates is currently 4 percentage points, which is due, in part, to the State's older population profile.

Tasmania's Population

Population growth in Tasmania has been very modest in recent years due to high rates of net out‑migration to mainland states. This has been driven recently by low levels of interstate arrivals as much as by high rates of departures. Tasmania consistently receives a much lower share of international migrants, relative to its population share, than mainland states.

The growth rate of 0.3 per cent in 2013‑14 was below the long‑term average and much lower than the national increase of 1.7 per cent. The high rates of net out‑migration have started to ease and further improvement is expected as labour market conditions become less favourable in other jurisdictions and housing affordability in Tasmania remains relatively high compared to the mainland.

Population growth of 0.4 per cent is expected in 2014‑15 and a further modest increase to 0.5 per cent is forecast for 2015‑16. The projections from 2016‑17 onwards of 0.6 per cent growth reflect the long‑term trend.

Monetary Conditions

Monetary conditions continue to be very stable. The underlying inflation rate in Australia is currently around 2.4 per cent, which is within the Reserve Bank's medium‑term target band of between two and three per cent. In the year to the March quarter 2015, Hobart's Consumer Price Index (CPI) increased by 1.7 per cent, below the national rate of 2.1 per cent. Over the long‑term, the annual increase in the Hobart CPI has been around 0.2 of a percentage point below the national increase, which may reflect generally weaker demand conditions in the State.

The Reserve Bank of Australia decreased the cash rate in May 2015 by 25 basis points to 2 per cent, following a reduction of 25 basis points in February 2015. This has led to very low borrowing rates for households and businesses, but also to lower earnings for households that rely on interest‑earning assets.

Hobart's CPI is estimated to increase by 1¼ per cent only in 2014‑15, reflecting the very low quarterly increases to March 2015. For 2015‑16, CPI growth is forecast at 2¼ per cent, which is marginally below the national CPI increase of 2½ per cent forecast by Australian Treasury.

Risks to the Outlook

The forecast for economic growth for 2015‑16 in Tasmania is above the long‑term trend and is based on positive contributions from the private and public sectors. The forecasts also include a further decline in the unemployment rate to levels that are much closer to Australian Treasury forecasts for the national unemployment rate than in recent years.

Compared to nationally, business confidence has been very high in Tasmania. Any easing of this level towards national levels, which could arise if national economic conditions deteriorate, may be reflected in lower business investment.

Major public and private investment projects can often be delayed or progress more slowly than planned, such that the economic activity extends over a longer period than expected, and the level of investment in any one year is lower than anticipated. Furthermore, the price of imported capital equipment is likely to be increasing with the depreciation of the Australian dollar and some businesses may defer purchases in the hope that the Australian dollar value rises again.

Some very large construction projects are set to commence or ramp up in coming months, mostly in the Hobart area. A potential constraint on the increase in investment is the availability of sufficient skilled labour in the construction industry and these very large projects drawing resources away from other potential building activity.

An upside risk is that the recovery in Tasmania's international exports is more rapid than anticipated. The combination of the expansion of some parts of Tasmania's agriculture industry, such as horticulture, the increased access to markets, particularly in Japan and China, and the more favourable exchange rate could lead to stronger export growth than forecast.

Against this, however, is the uncertainty over future exchange rates, given the volatility over recent years, and the impact this could have on Tasmania's export sector. If this adds significantly to the risks exporters face, it may lead to some businesses deferring investment decisions until they consider the exchange rate environment is more settled.