If you’re not careful, you could get the impression from this week’s national accounts that, after huge budgetary stimulus, the economy is recovering strongly and, at this rate, it won’t be long before our troubles are behind us.
So much so that our “terms of trade” – the prices we get for our exports compared with the prices we pay for our imports – improved by 4.7 per cent in the December quarter, and by 7.4 per cent over the year. This time, the economy was chugging along slowly, with the Reserve Bank using low interest rates to try to speed things up, when a pandemic arrived. Some people were so worried they stopped going to restaurants and pubs. But to stop the virus spreading, the government ordered many businesses to close and the whole nation to stay at home.
But the need of our second biggest state, Victoria, to impose a second lockdown – which wasn’t lifted until November - has seen the rebound spread over two quarters, with a bit more to come in the present, March quarter.
1RossGittins apparently no in China...?
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