Economic downturn might not be so severe

The economic downturn from coronavirus may not be as severe as predicted, Reserve Bank boss Philip Lowe says.

Dr Lowe has told a Senate inquiry Australia’s recovery largely depends on when the public regains its confidence in their health and finances.

“With the national health outcomes better than earlier feared, it’s entirely possible the economic downturn will not be severe as earlier thought,” he told the hearing on Thursday.

“Even as the recovery gets under way, as it will, there will still be a shadow cast over our economy by the pandemic.

“And as a country we’ll need to turn our minds as how to best move out of that shadow.”

Dr Lowe says more job losses are expected but not as bad as the figures from April, where nearly 600,000 jobs were lost in the month.

He described those figures as “shocking”, but not as bad as predicted.

Industries that kept employers during the start of the pandemic will now start to struggle as their pipeline of work dries up, Dr Lowe added.

Australian Prudential Regulation Authority chair Wayne Byres and Australian Securities and Investments Commission chair James Shipton will appear via videoconference before the COVID-19 committee hearing.

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