Lockdown household consumption down 15 per cent: RBA

Households and businesses have showed remarkable resilience and an ability to change how they do things, according to the RBA governor Dr Philip Lowe. "It is a positive story," Dr Lowe's opening Statement to the House of Representatives Standing Committee on Economics advised But he did note as a rough rule of thumb, household consumption in areas that are locked down is typically around 15 per cent lower than it would be otherwise. "The lockdowns have directly affected construction activity in NSW and delayed some investment plans. "Some increase in the unemployment rate is also expected over the months ahead, although most of the adjustment in the labour market is likely to be through declines in hours worked and participation, rather than in job losses. "As we assess the impact of the lockdowns on the economy, it is important not to lose sight of the fact that not all of Australia is affected. "Significant parts of the Australian economy are still on the positive trajectory that was in place before the recent outbreaks. "This is quite different from the situation in the first half of last year, when the whole of Australia was in lockdown. "So, it is a mixed picture," he said adding that the economy is expected to bounce back quickly once the restrictions ease. "Our central scenario is that the economy will return to strong growth in 2022, with GDP increasing by a little over 4 per cent, to be followed by growth of around 2½ per cent in 2023. "In this scenario, the unemployment rate resumes its downward path to reach around 4¼ per cent by the end of next year and 4 per cent the following year. "If we are successful in containing the virus over the months ahead, it is possible there will be stronger upswings in both investment and consumption than envisaged in our central scenario."