The Reserve Bank of Australia (RBA) on Thursday released a report detailing the country’s economic rebound in the wake of national shutdowns triggered by the outbreak of the Delta Covid variant.
RBA Governor Philip Lowe said Australia had avoided worst case scenarios from the pandemic, reports Xinhua news agency.
“There were credible predictions that tens of thousands of Australians would lose their lives, the health system wouldn’t cope, there would be mass unemployment, and that the economy would suffer deep scars…We have avoided these dire predictions,” Lowe said.
The report showed that GDP growth in Australia had experienced a sharp recovery over 2021, spiking to just over 8 per cent mid-year before levelling out at 4 per cent at the end of 2021.
It showed that household savings during the pandemic had skyrocketed to over A$200 billion ($143 billion), which were expected to continue to drive household spending.
“We do expect the positive momentum in the economy to be maintained through the summer,” said Lowe.
While he did believe rising levels of consumption were a good indicator that individuals and businesses were learning to live with the virus, he flagged increased uncertainty delivered by the Omicron variant of concern.
“The Omicron outbreak does, though, represent a downside risk and it is difficult to know how things will develop from here.”
The bank said Australia’s tightening labour market would likely see unemployment rates continue to fall, forecasting the current rate of 5.2 per cent would drop to 4.25 per cent by the end of 2022, and 4 per cent by the end of 2023.
Lowe addressed another point of concern in recent months, inflation, which has grown to an alarming rate of 6.8 per cent in America.
He dispelled fears that this trend was being replicated in Australia.
“In underlying terms, inflation is 2.1 per cent and has only just returned to the 2-3 per cent target range for the first time in six years.”
Lowe also hinted that the bank would scale back its weekly purchasing of A$4 billion in government bonds in May, although an official decision has not yet been made.