Australia’s Financial Stability Report and COVID-19 Pandemic
Today the Reserve Bank of Australia issued their Financial Stability Report and it states that financial systems around the world face significant risks that can be attributed to the COVID-19 pandemic.
The report says that financial systems have cushioned the shock of the pandemic but there are issues that will be faced when the world economy starts full scale recovery such as borrower solvency especially in housing markets where borrowers have extended themselves nearly to the max.
The report also says that some financial systems have had elevated risks prior to the pandemic and this could cause problems when their economies start to recover and these financial systems are likely to experience elevated risks for some time to come.
A very interesting report from the RBA and something that we all need to mindful of and how having a secondary sources of income or boosting our main income stream is important.
The Aussies are made of tough stuff and ironically thats what will help their economy bounce back quicker. The Aussies always have a focused plan and they deal with problems head on. Unlike in Europe where we all flap around for ages and then sort ourselves out.
The financial sector is the hardest hit by the Covid-19 pandemic. It is a similar situation here in Indonesia. The financial service sector is the hardest hit.
However, the agricultural sector and the internet and telecommunication company recorded positive quarterly growth. What sectors in the Australian economy perform best during the pandemic Edward? Mainly how your industry perform in this challenging time?
The Reserve Bank of Australia has many times helped to reduce on business failures in the economy .This is done in order to reduce unemployment,loan repayment, deferrals rent and temporary insolvency relief .
These support policies have increased business cash flow and reduced the number of business failures by around 4600 firms.
Economists have predicted a cut of interest rate from 0.25 to 0.1 percent.
The RBA is now not comfortable as it is about to stop financial stability to promote support poliçies and business failures will be high.
GOING BY THE REPORT, AUSTRALIA’S IS DOING GREAT IN CUSHIONING THE EFFECTS OF COVID-19 ON HER CITIZENS AND THE COUNTRY AT LARGE.
I think the speech by Michelle Bullock (click here), the Assistant Governor of The Reserve Bank Australia, clearly explains how the pandemic affects the Australian economy and their financial system stability.
She conclude that the pandemic severely damage the Australian economy. But the financial system has withstood the test. The Australian Banks are well capitalized before the pandemic so the system has capital buffer to keep the economy running during the economic slowdown in the pandemic.
Furthermore, she said that the Australian financial system remains profitable during the pandemic.
I don’t know a lot about Australian economy system, so I have to do some researches to know how Australia Bank is operating to help they population.
In summary COVID19 has had a huge impact on the Australian Economy and it will take time to recover. Luckily the economy beforehand was in pretty good shape so there is a fair amount of stored reserves to see them through and as we know the Aussie’s are pretty damn resilient!!