Australia was in a much better position going into the coronavirus crisis than other countries, and the economic downturn is not as bad as the Reserve Bank thought it would be a few months ago.
Governor Philip Lowe says the economy is benefiting from the way the government has responded to the pandemic, and the outlook has improved.
“Three or four months ago I thought hours worked in Australia could fall close to 20 per cent, I think the number now is more like 10 per cent, so it’s not nearly as bad as anticipated,” Dr Lowe told the ANU Leadership forum in Canberra.
He said there will be a shadow over the economy that might last for years, with confidence about the economy slow to return unless regulation reforms are undertaken.
“I’ve been encouraged recently that the government has moved in a number of areas, it’s talked about industrial relations, it’s talked about infrastructure and it’s talked about the need to reduce regulation,” Dr Lowe said.
“I fear if we don’t leverage the advances in technology and and we don’t see policy reform we’ll just go on and meander, and kind of have slow growth and slow growth in incomes.”
He said he’s been encouraged by the way the government has responded to the crisis in the past few months, and it shows there’s a capacity for it to make economic reform.
“Australia has done remarkably well over the past few months compared to other countries, both on the health front, the political cohesion and the economic front,” he said
“That should give us more confidence that we’ll meet the economic challenges as well.”