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Coronavirus update live: RBA says Australia faces biggest contraction since Great Depression – latest news Coronavirus update live: RBA says Australia faces biggest contraction since Great Depression – latest news
(32 minutes later)
As Australia’s infection rate falls, state and federal leaders will discuss lifting ban on elective surgery at meeting on Tuesday. Follow all the latest news, liveAs Australia’s infection rate falls, state and federal leaders will discuss lifting ban on elective surgery at meeting on Tuesday. Follow all the latest news, live
Thanks for your company for part of this afternoon, I’m handing the blog over to Graham Readfearn now and for the next little while. Don’t worry, it’s still coming to you direct from the independent republic of Queensland, across the Sunshine State’s closed borders.
Go well.
The South Australian chief public health officer, Dr Nicola Spurrier, says there have been two new coronavirus cases in the state today.
The South Australian premier, Steven Marshall, is the latest to offer up an update.
He is speaking about the resumption of elective surgery.
Asked why the RBA isn’t referring to the economic contraction as a recession, Lowe says it is “very different to a [normal] business cycle downturn”.
Lowe again predicted that interest rates will stay low for a very long period of time. The RBA predicts that inflation will not reach the 2% to 3% target range for at least three years.
Wage growth – which was already not enough to push inflation to the target band before the Covid-19 crisis – is predicted to slow further.
Asked what sort of reform the RBA has in mind to reinvigorate the economy, Lowe replies:Asked what sort of reform the RBA has in mind to reinvigorate the economy, Lowe replies:
The RBA governor’s remarks are the clearest, strongest acknowledgement that Australia’s economy is facing unprecedented challenges.The RBA governor’s remarks are the clearest, strongest acknowledgement that Australia’s economy is facing unprecedented challenges.
Lowe says the national output and unemployment numbers “are all very large numbers and ones that were inconceivable just a few months ago”.Lowe says the national output and unemployment numbers “are all very large numbers and ones that were inconceivable just a few months ago”.
Lowe is devoting some time to rejecting the idea that because the RBA is buying government bonds in the secondary market, that it is directly financing government spending.He says:Lowe is devoting some time to rejecting the idea that because the RBA is buying government bonds in the secondary market, that it is directly financing government spending.He says:
Lowe says the RBA is confident the economy will bounce back and recover, because “all the elements that made Australia a prosperous and successful country will still be there”.Lowe says it’s difficult to be certain, but sketches out some scenarios. If restrictions are eased by mid-year, and most are lifted by year’s end except for the ban on international travel: under this scenario, GDP could grow 6% to 7% in 2021, after shrinking by that amount in 2020. Nevertheless, it is likely unemployment will be 6% or above for several years, and wage growth will be below 2%.The other “scenarios” are a statement of common sense: if restrictions are less lengthy, recovery will be quicker; if they are in place longer, the disruption will be worse.Lowe warns that people’s behaviour could be permanently changed, and result in structural changes in the economy.Lowe says the RBA is confident the economy will bounce back and recover, because “all the elements that made Australia a prosperous and successful country will still be there”.Lowe says it’s difficult to be certain, but sketches out some scenarios. If restrictions are eased by mid-year, and most are lifted by year’s end except for the ban on international travel: under this scenario, GDP could grow 6% to 7% in 2021, after shrinking by that amount in 2020. Nevertheless, it is likely unemployment will be 6% or above for several years, and wage growth will be below 2%.The other “scenarios” are a statement of common sense: if restrictions are less lengthy, recovery will be quicker; if they are in place longer, the disruption will be worse.Lowe warns that people’s behaviour could be permanently changed, and result in structural changes in the economy.
He suggests the economy could be reinvigorated if economic reform is pursued to make businesses more likely to expand and invest.He suggests the economy could be reinvigorated if economic reform is pursued to make businesses more likely to expand and invest.
No word on which reforms yet – although I’m sure he’ll be asked shortly.No word on which reforms yet – although I’m sure he’ll be asked shortly.
Phil Lowe, the Reserve Bank governor, is giving an update about the “difficult days ahead” for the Australian economy.Phil Lowe, the Reserve Bank governor, is giving an update about the “difficult days ahead” for the Australian economy.
Lowe says the next few months are going to “be very difficult ones for the Australian economy” because “many normal activities cannot take place for the moment”.Lowe says the next few months are going to “be very difficult ones for the Australian economy” because “many normal activities cannot take place for the moment”.
The RBA expects:The RBA expects:
Australia is likely to experience “the biggest contraction in national output since the 1930s”.Australia is likely to experience “the biggest contraction in national output since the 1930s”.
The decline is estimated to be 10% over the first half of 2020, with most of the decline in June quarter.The decline is estimated to be 10% over the first half of 2020, with most of the decline in June quarter.
Total hours work are estimated to decline by 20%, a “staggeringly large number”, Lowe said.Total hours work are estimated to decline by 20%, a “staggeringly large number”, Lowe said.
Unemployment is expected to be 10% by June.Unemployment is expected to be 10% by June.
The RBA also predicts negative inflation, for the first time since the 1960s.The RBA also predicts negative inflation, for the first time since the 1960s.
Lowe sounds a positive note though: “As a country we are up to the task ... all arms of public policy are pulling together.”Lowe sounds a positive note though: “As a country we are up to the task ... all arms of public policy are pulling together.”
My colleague Paul Karp reports on the latest Australian Bureau of Statistics job figures, which show almost 800,000 Australians lost their job during the first three weeks of coronavirus restrictions.My colleague Paul Karp reports on the latest Australian Bureau of Statistics job figures, which show almost 800,000 Australians lost their job during the first three weeks of coronavirus restrictions.
That’s about 6% of the workforce.That’s about 6% of the workforce.
The chief executive of private hospital provider St Vincent’s, Toby Hall, says the resumption of some elective surgeries is “a terrific signpost on the road back to normality”.The chief executive of private hospital provider St Vincent’s, Toby Hall, says the resumption of some elective surgeries is “a terrific signpost on the road back to normality”.
Hall says private hospitals will remain in the fight against Covid-19 but given Australia’s relatively low case rates the system had capacity for facilities and personnel to begin working on priority elective surgery cases.Hall says private hospitals will remain in the fight against Covid-19 but given Australia’s relatively low case rates the system had capacity for facilities and personnel to begin working on priority elective surgery cases.
Cook is now commenting on the resumption of elective surgery. He says the state will be reviewing the situation every three weeks.Cook is now commenting on the resumption of elective surgery. He says the state will be reviewing the situation every three weeks.
Roger Cook says the latest numbers in WA are a “terrific result” and that total case numbers have gone down due to eight confirmed recoveries.Roger Cook says the latest numbers in WA are a “terrific result” and that total case numbers have gone down due to eight confirmed recoveries.
The Western Australian health minister, Roger Cook, says the state has had one new case of Covid-19, a female healthcare worker.The Western Australian health minister, Roger Cook, says the state has had one new case of Covid-19, a female healthcare worker.
Good afternoon to everyone from beyond Queensland’s closed borders. Looking forward to being with you for the next couple of hours as we digest some of the day’s events.Good afternoon to everyone from beyond Queensland’s closed borders. Looking forward to being with you for the next couple of hours as we digest some of the day’s events.