Australia economic downturn to be less severe than initially feared: RBA

[SYDNEY] Australia's central bank chief said on Thursday that better-than-feared health outcomes from the Covid-19 pandemic suggest the country's economic downturn will likely not be as severe as earlier thought.

The remarks come as Australia, with a much lower Covid-19 death toll than other advanced countries, has started resuming normal life barely halfway into the six-month shutdown first flagged by the government.

Reserve Bank of Australia (RBA) Governor Philip Lowe added that a mid-March stimulus package, including an unlimited quantitative easing programme, to cushion the blow to the economy was working "as expected".

"It is helping build the necessary bridge to the recovery," Mr Lowe said.

"The shape and timing of that recovery depends not only on when restrictions are lifted, but also on the confidence that Australians have about their own health and their finances," Mr Lowe added.

"With the national health outcomes better than earlier feared, it is possible that the economic downturn will not be severe as earlier thought. Much depends on how quickly confidence can be restored."

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Mr Lowe was speaking before a parliamentary committee which is looking at the Australian government's response to the coronavirus pandemic.

Australia has recorded just above 7,100 coronavirus cases so far and 103 deaths, with new infections under control across all eight states and territories.

REUTERS