RBA boss calls out Omicron risk

Reserve Bank of Australia governor Philip Lowe has admitted it is difficult to know how the new variant will impact the nation’s economic recovery.

21 December 2021

Addressing CPA Australia Riverina Forum last week, Mr Lowe said that as 2021 draws to a close, the economy is in recovery mode. 

“This follows a setback in the September quarter when GDP declined by 1.9% due to the measures taken to contain the Delta outbreak,” he said. 

“In the quarter, there were sharp declines in household consumption and hours worked. But on a more positive note, spending was more resilient than we had expected, providing further evidence that households and businesses are adjusting to living with the virus.”

With lockdowns being lifted, spending is bouncing back quickly, especially on services. However, Mr Lowe noted that the Omicron outbreak did represent a downside risk and it was difficult to know how things would develop from here. 

“But we do expect the positive momentum in the economy to be maintained through the summer, underpinned by the opening up of the economy, the high rates of vaccination, significant fiscal and monetary support, and the strengthening of household and business balance sheets over the past year or so,” he said. 

Mr Lowe said the recovery in the economy was also evident in the sharp rise in the number of job advertisements and job vacancies. 

However, he noted there were also increasing reports that firms were finding it difficult to find workers. 

“This is especially so in a range of professional services, the construction industry, agriculture, and parts of the hospitality industry,” he said.

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