An audience poll during Bloomberg‘s ’Inside Track webinar series showed a
similar divide. Some 41% of respondents expected the Australian
economic recovery to be U-shaped, while 34% saw a W-shaped path.
Australians optimism following the early relaxation of the Covid-19
lockdown and reopening of the economy is being tempered by a renewed
outbreak in the southern state of Victoria that has seen restrictions
reinstated for isolated areas.
“A whole lot of businesses wouldn‘t be sustained a second time
through, a lot of households wouldn’t be sustained a second time
through, and the government could not be as generous,” RBA board member
Ian Harper said in an interview last month. “If you add on top of that
the devastating impact that would have on public confidence, thats the
one that really bothers me.”
The central bank scooped up more than A$50 billion ($34.7 billion) of
government securities of varying maturities in the weeks after an
emergency meeting in March, as it tried to soothe dislocated markets and
lower borrowing costs. It hasnt bought anything further since early May
as the three-year bond yield remains around its target.
The RBA has been urging the government to maintain stimulus support
beyond September, when programs like its wage subsidy to keep workers
tied to employers, higher unemployment payments and other support
measures are due to expire. The fear is that the economy could be set
back badly if some of these programs arent extended.
“If there were no tapering and for whatever reason the government
decided just to let it stop, then I think we havent seen the peak in
unemployment,” Harper said.
Australias jobless rate advanced to 7.1% in May and the Treasury expects it to reach 8% this quarter.
