Daily Commentary BY THE CURVE TEAM –

Health Gains Stabilise the Outlook

18th of August, 2020

For several months now the most salient factor in the medium term economic outlook has been a health factor which now appears to be stabilising.

In one of the most hopeful signs for some time, numbers of confirmed Covid-19 cases in Victoria have been in decline now for several days. There is now some hope that we may not see a further extension on hard lockdown measures beyond the current end date of September 13. Whilst it is certainly too early to be sure about this, the data on case numbers is at least headed in the right direction.

The nation is currently battling twin crises, the health crisis of Covid-19 and the restrictions required to control that have lead to the economic crisis. Thus is makes sense that we cannot solve our problems economically until we deal with the underlying issue. Economic confidence at the household and business level will not return until people have some convictions that lockdown measures are unlikely to return for some time.

As with many factors of this current twin crises and as the government has alluded to on many occasions, the metaphoric bridge to the other side will be long and challenging. The hope is that significant setbacks in the recovery as we have had with the outbreak in Victoria will be few and far between.

Later today we will hear from the RBA once again with the release of their August Board Meeting Minutes. Given the Governors recent testimony and the SoMP these are unlikely to contain any new information. They will likely reiterate once again that the RBA Board has little room left to make financial conditions any more accommodative, that it is now over to government to provide fiscal and structural reform to get the economy growing once again.

Matthew Dunshea

Client Relationship Manager