RBA Concerned About W-Shaped Recovery

The Reserve Bank of Australia has used Friday’s quarterly assessment of the economy to announce that lockdown has delayed but not derailed the nation’s economic recovery.

It says economic activity probably contracted by 2.5% in the three months to last September, but the Q4 could regain most of the previous losses, leaving the economy recovering much as it would have without mid-year lockdown.

Taken together with last year’s descent into recession and quick bounce back it paints a picture of a W-shaped recovery, even on what the Bank has graphed as its downtrend scenario.

As a sign of emerging confidence it points to an increase in the number of people prepared to change jobs because they are looking for something better or different.

It says this is partly a bounce back from the start of the COVID-19 recession when workers appeared to put plans they might have had to change jobs on hold.

The central bank is concerned about property markets at home and abroad. With Evergrande’s crisis in mind, average home prices have reached fresh highs in the majority of Australian cities.