The Reserve Bank of Australia said it expects the to recover over coming quarters at a faster than previously estimate pace.
However, the economy is likely to be noticeably smaller at the end of the forecast period than anticipated prior to the pandemic, partially because of a sharp slowing in population growth, the bank said in the Statement of Monetary Policy, released Friday.
Gross domestic product is forecast to grow 6 percent in the year ending June 2021 compared to the previous projection of 4 percent. At the same time, the outlook for the year ending June 2022 was retained at 4 percent.
The unemployment rate is expected to peak a little below 8 percent around the end of the year. This peak represents a very high level of spare capacity in the labor market, the bank noted.
The unemployment rate is expected to decline only gradually, to just above 6 percent by the end of 2022.
Both headline and trimmed mean inflation are forecast to bottom out below 1 percent in 2021, and reach 1.5 percent by end 2022.
According to RBA forecast, population growth will be 0.2 percent in 2020/21 and 0.4 percent in 2021/22. This was the slowest rate of population growth since the First World War.
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