Philip Lowe fears a world 'in shadow for years' (AAPIMAGE)
Weak demand for credit is one of the possible long-term outcomes of the COVID-19 crisis, as businesses and households adopt more risk averse positions, Reserve Bank governor Philip Lowe has warned.
Speaking at the ANU Crawford Leadership Forum yesterday, Lowe said: “When we get to the other side, we face a world where there will be a shadow for a number of years – a slower growth world with lower borrowing and weaker population dynamics.
“There may be a protracted period where people will be risk averse and where there will be less investment and less spending.
“Should we accept that? I think no. It is not inevitable. Government can play a role with a reform agenda backed by business.”
Lowe would like to see reform in a number of areas, including tax, regulation, infrastructure, capital, entrepreneurship industrial relations and research and development.
“We should focus on society’s attitude to risk and entrepreneurship,” he said.
“There is a lot of capacity. Firms with good ideas can attract workers and capital. But there is a lack of economic dynamism.
“I have been concerned about this for some time and I am more so now. We have low R&D spend, low business formation. We are not as dynamic as we used to be.
“I am optimistic about the future. Australia has fantastic underlying fundamentals. They can reassert themselves.”