Pandemic has created ‘a new normal’ for Australia’s economy, says former RBA board member
Australia will likely find COVID-19 has a lingering effect on the economy and the sheer scale of stimulus means it will probably be a couple of years before it’s clear how much has changed, former Reserve Bank board member Heather Ridout said.
“People are operating differently, companies are having to operate differently and it’s going to take a long time before supply chains get back to what they were before,” Ridout said in an interview with Bloomberg. “There will be a new normal and I think worrying about pandemics and all of this will become part of the new normal.”
“People are operating differently, companies are having to operate differently and it’s going to take a long time before supply chains get back to what they were before”: Heather Ridout says the after-effects of COVID .Credit:Louie Douvis
A productivity boost will linger from people opting to keep using the technological advances forced by the pandemic, she said. These range from online meetings instead of flying interstate and tele-medicine replacing visits to the doctor, while trends like online shopping have been sharply accelerated.
Australia executed one of the largest stimulus plans in the developed world as the government distributed hundreds of billions to support the economy. The central bank meantime took interest rates down to near zero and introduced yield curve control to lower borrowing costs, while undertaking quantitative easing to keep a lid on the currency.
“For business at the moment there’s so much stimulus around,” said Ridout, who currently sits on the boards of the Australian Securities Exchange and Sims Metal Management and is a former chair at AustralianSuper.
She notes that, as in the aftermath of the 2008 global financial crisis, China’s recovery is helping Australia emerge from the pandemic. It’s an irony because ties between Australia and its largest trading partner have deteriorated over the past year.
“China keeps giving to Australia even though they hate us,” she said with a laugh. “This is really important and hugely valuable for us.”
Ridout is fretting about the slow pace of Australia’s vaccine rollout and says it could see international borders closed for two years or even longer. It could also see further snap lockdowns.
“We’ve got to get the borders open, people have got to get vaccinated, they’ve got to have the confidence to get on planes. People who are vaccinated should be able to come here,” she said.
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