In his economic and financial update, governor Lowe said that Australia “should not be expecting that we will quickly return to business as usual”, with the coronavirus crisis likely to cause higher levels of debt and “structural changes” to the economy.
“We are all learning to work, shop and travel differently,” governor Lowe said. “Some of these changes will probably stay with us, requiring a rethinking of business models. So the crisis will have reverberations through our economy for some time to come.”
Under an optimistic scenario – with a gradual lifting of restrictions and resumption of business activity – the economic bounce-back would begin in September. That would see the economy grow rapidly in 2021, with GDP expected to increase by about 6 to 7 per cent after a fall of 6 per cent. But governor Lowe flagged the need for major reforms to “reinvigorate the country’s growth and productivity agenda” and “move us out of the shadows cast by the crisis”.
“A strong focus on making Australia a great place for businesses to expand, invest, innovate and hire people is the best way of extending the recovery into a new period of strong and sustainable growth and rising living standards for all Australians,” governor Lowe said.
However, other scenarios – including one where restrictions stay in place or have to be reimposed – could mean the recovery would be delayed and the loss of incomes and jobs would be “even more pronounced”. Governor Lowe also flagged a more optimistic scenario, where restrictions are lifted more quickly as Australia succeeds in its fight against the virus, but said that the Australian economy would weather the storm in any circumstances.
“We can be confident that our economy will bounce back and that we will see it recover,” governor Lowe said. “We need to remember that once the virus is satisfactorily contained, all those factors that have made Australia such a successful and prosperous country will still be there.”
