Australian Economy Expected To Rebound As Restrictions Ease
As JB Hi Fi and Amazon move to hire additional staff, Reserve Bank of Australia governor Philip Lowe is tipping an economic surge in spending.
According to the Reserve Bank the Delta outbreak has interrupted the recovery of the Australian economy and GDP is expected to have declined materially in the September quarter.
The outbreak is affecting many parts of the economy, but the impact is uneven, with some areas facing very difficult conditions while others are continuing to grow strongly.
Despite this Lowe is predicting that pent-up demand in the nation’s two largest states will drive an economic surge in the final months of the year as Covid-19 restrictions ease, with employers embarking on a hiring spree ahead of a wave of spending from consumers freed from lockdowns.
Lowe has forecast a “bounce back’’ in the economy and a strong jobs market over the next few months on the back of the relaxation of Covid-19 restrictions.
This has led to Australia’s largest CE and appliance retailers moving to stock up and re hire staff many who had been laid off during lockdowns.
The setback to the Australian economy is expected to be only temporary.
The Reserve Bank claims that as vaccination rates increase further and restrictions are eased, the economy is expected to bounce back quickly with retailers desperate to get stock into stores despite shipping and component supply issues.
Many businesses are now planning for the easing of restrictions and confidence has held up reasonably well.
Lowe claims that there is uncertainty about the timing and pace of the bounce-back and it is likely to be slower than that earlier in the year.
Much will depend on the nature and timing of the easing of restrictions on activity. In their central scenario, the economy will be growing again in the December quarter and is expected to be back around its pre-Delta path in the second half of next year.
The restrictions on activity have had a significant effect on the labour market. Hours worked – the best indicator of labour market conditions at the moment – declined by nearly 4 per cent in August. Looking forward, the Bank’s business liaison and data on job vacancies suggest that many firms are seeking to hire workers ahead of the expected reopening in October and November.
Wage and price pressures remain subdued in Australia. In underlying terms, inflation is running at around 1¾ per cent and wages, as measured by the Wage Price Index, are increasing at just 1.7 per cent. While disruptions to global supply chains are affecting the prices of some goods, the impact of this on the overall rate of inflation remains limited.