RBA Downgrades Economic Outlook for Aussie Economy
The Reserve Bank of Australia (RBA) downgraded the country’s economic outlook in the wake of the ongoing coronavirus crisis, warning that unemployment levels could remain high for several years. According to the RBA’s latest estimates, the Australian economy is expected to contract by 6% in 2020 and then rebound higher over the next couple of years.
The central bank also cautioned that economic recovery could take longer than previously forecast in the wake of a second wave of infections that have hit Melbourne, resulting in the need for another total lockdown. The latest lockdown is expected to wipe off at least 2% from the current quarter’s GDP as the state of Victoria contributes to around 30% of the economy.
At the release of the latest economic outlook, RBA Assistant Governor Luci Ellis stated, “The large persistent rise in case numbers in Victoria and the ensuing introduction of Stage Four restrictions there were not anticipated. This is not exactly a lesson for our earlier forecasts, but it does show how quickly things can change in a pandemic.”
In 2021, Australia’s GDP could touch 4%, a lower estimate than the previous forecast for a growth of 7%. The RBA also revised GDP projection for 2022 lower, from 5% previously to 4%.
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