Guy Debelle: The virus and the Australian economy

Keynote address by Mr Guy Debelle, Deputy Governor of the Reserve Bank of Australia, at the Australian Financial Review Business Summit, Sydney, 11 March 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for the opportunity to speak to you today.

I had been intending to talk about investment, the theme of this conference. But, given the circumstances, instead I will provide a summary of how the Bank is seeing developments in the economy at the moment. I will provide our assessment of where the economy was ahead of the onset of the coronavirus as well as an assessment of the effect of the virus to date, including on financial markets.

The December quarter national accounts confirmed our assessment that the Australian economy ended 2019 with a gradual pick-up in growth. Growth over the year was 2¼ per cent, up from a low of 1½ per cent. Consumption growth was a little stronger in the quarter, although still subdued. We had estimated that the bushfires will subtract around 0.2 percentage points from growth across the December and March quarters, but besides that, economic growth was set to continue to pick up supported by low interest rates, the lower exchange rate, a rise in mining investment, high levels of spending on infrastructure and an expected recovery in residential construction.