Signs economy is turning around, Reserve Bank says

There are signs the Australian economy is recovering from the coronavirus pandemic. Picture: Dion Georgopoulos
There are signs the Australian economy is recovering from the coronavirus pandemic. Picture: Dion Georgopoulos

Australia's first recession in nearly three decades may be easing, Reserve Bank deputy governor Dr Guy Debelle has told Senate estimates.

Nearly five months after Treasurer Josh Frydenberg confirmed Australia had fallen into the first recession since 1990 amid the coronavirus pandemic, Dr Debelle said there were signs the economy was looking up.

"At the moment, our best guess at the moment it looks like the country probably recorded positive growth [during the September quarter], rather than negative [growth]," Dr Debelle said.

Dr Debelle said the result was likely due to the strength of the overall economy, as well as the hit to Victoria being not as bad as was feared originally.

"The strength of the growth elsewhere in the country was more than the drag from Victoria, and possibly the drag from Victoria was a little less than what we'd guessed back in August," Dr Debelle said.

The Reserve Bank will release its next statement on monetary policy next Friday.

It will also hand down a decision on interest rates on Tuesday.

The RBA's August outlook had warned the containment measures in Victoria would help shave at least 2 percentage points from national growth in the September quarter.

However it noted: "A stronger economic recovery is possible if faster progress in controlling the virus is achieved in the near term."

It came as Prime Minister Scott Morrison warned "we cannot look to a future of lockdowns as a way of managing this virus".

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While he welcomed the easing of restrictions in Victoria, Mr Morrison said, "borders and lockdowns are not demonstration or evidence of success".

"They are not evidence of success, they are evidence of outbreaks that have got out of control," he said.

"What we must do is ensure we have the testing and the tracing and the isolation and the quarantine options and all of these things which national cabinet and my cabinet are working to deliver for Australians because we are going to open safely and we are going to safely remain open."

This story 'Our best guess': Signs economy is turning around, Reserve Bank says first appeared on The Canberra Times.

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