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Australian Economic Recovery Relies on Virus Cures: Reserve Bank Governor Philip Lowe

The speed of Australias economic recovery is depending on the scientists worldwide racing to find a COVID-19 vaccine.

Reserve Bank governor Philip Lowe warns that without a vaccine, the economy will take a lot longer to bounce back as people fear for their health.

Restoring peoples confidence on the health front was a precondition for a strong recovery, he said.

“We might get a vaccine, we might get some anti-viral medication but its also possible that we dont, so we have an incredible lot riding on the work of the scientists,” he told finance professionals in an online conference on May 21.

“If we dont get breakthroughs on the medical front then I think its going to be quite a slow recovery.

“Everyone is going to be nervous about their health so they wont want to spend.”

Lowe said the faster restrictions in place to slow the spread of the virus could be lifted, the less “economic scarring” Australia would suffer.

Last weeks unemployment data was a stark reminder of the human cost of the efforts to contain the pandemic.

Almost 600,000 Australians lost their jobs in April and another 750,000 were employed but worked no hours, indicating they were probably on the JobKeeper wage subsidy.

That subsidy now covers 6.1 million people.

Treasury boss Steven Kennedy said while the official unemployment rate is 6.2 percent, the true number is closer to 9.6 percent.

Thats taking into account the 489,000 extra people not counted in the jobless data because they werent actively seeking work.

Kennedy expects the headline unemployment figure to rise closer to Treasurys estimated 10 percent as restrictions ease and people start looking for work again.

“The peak in my view would come through in these months in April and May. Wed be pretty close to it (now) would be my guess,” he told a Senate committee.

Forecasting the return of confidence for both consumers and business was the hardest part of looking at the recovery plan.

“The glimmer of hope is that all that productive enterprise that sat there at the beginning sits there at the end,” Kennedy said.

“The question is whether youve avoided the destructive cycles of firms going broke because they just ran out of cashRead More – Source