The economic and market outlook for Australia in 2021 is looking more positive, according to Commonwealth Bank’s chief economist Stephen Halmarick.
Mr Halmarick said while the spread of COVID-19 had undoubtedly had a significant impact on the Australian economy, financial markets, and monetary and fiscal policy, the implications have – pleasingly – been less severe than originally predicted.
“Australia has done a better job than just about any other nation in controlling the spread of the virus,” Mr Halmarick said.
“This, combined with fiscal and monetary policy support being provided to the economy, and the role played by the Australian banking system, means the economic impact of COVID 19 has been less severe in Australia than many other nations, and less severe than initially expected.
“To be sure, Australia’s 30-year run without a recession has come to an end, and the human toll of the sharp rise in the unemployment rate has been very real. But, the outlook for Australia is improving.”
Mr Halmarick said one key consequence of the current health pandemic had been its impact on monetary policy.
“The recession, the rise in the unemployment rate, the global economic environment, and the expectation that inflation will remain below the 2 to 3 per cent target range for years, has seen monetary policy in Australia enter unconventional space for the very first time,” he said.