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RBA's Lowe Says Economy To Shrink About 10% In H1

Reserve Bank of Australia's Governor Philip Lowe on Tuesday said the economy is set to experience the biggest contraction in national output and income since the 1930s due to the COVID-19 pandemic.

Lowe expects the national output to fall by around 10 percent over the first half of 2020, with most of this decline taking place in the June quarter.

The unemployment rate is likely to be around 10 percent by June, Lowe noted. However, the rate might be lower than this if businesses are able to retain their employees on lower hours.

Further, he cautioned that as the economic data roll in over coming months, they will present a very sobering picture of the state of the economy. There will be many reports of record declines in economic activity, the banker added.

"Whatever the timing of the recovery, when it does come, we should not be expecting that we will return quickly to business as usual," said Lowe.

In March, the Reserve Bank had reduced the cash rate to a record low of 0.25 percent and targeted to bring the yield on three-year government bonds at around 0.25 percent. Also the bank introduced a three-year funding facility to help small and medium sized firms.

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