Australian economy must come off COVID-19 ‘life support’, PM to say

Tuesday, 26 May 2020 01:10 - - {{hitsCtrl.values.hits}}

The Reserve Bank of Australia expects the economy to shrink by 10% in the first half of this year, marking its first recession in three decades, while unemployment is expected to top 10%

SYDNEY (Reuters): Australia’s economy must not become reliant on Government stimulus, Prime Minister Scott Morrison will say today, as Canberra unwinds State support and accelerates plans to spur growth.

Australia has reported just over 7,100 COVID-19 infections, including 102 deaths.

That is well below the equivalent numbers reported by many other developed countries, an achievement it attributes to tough social distancing rules that have prevented local hospitals from being swamped with coronavirus patients but taken a heavy toll on the economy.

Australia’s Government and Central Bank have pledged more than A$ 250 billion to cushion the economic blow, but Morrison will say the stimulus must come to an end.

“At some point you’ve got to get your economy out of intensive care,” he will say in a speech in Canberra today afternoon, extracts of which were sent to Reuters. “You’ve got to get it off the medication before it becomes too accustomed to it.”

The Reserve Bank of Australia expects the economy to shrink by 10% in the first half of this year, marking its first recession in three decades, while unemployment is expected to top 10%. Economists had expected Canberra would have to borrow about A$ 300 billion to support the economy, though the cost of its centrepiece wage subsidy scheme was last week revised down by A$ 60 billion. Morrison will say his Government is formulating a plan to ignite economic growth that is likely to focus on tax reform and deregulation. Details are expected with the budget in October.

He will also say Australia will streamline skills training to increase the talent pool for businesses.