Productivity a tough puzzle for central bank boffins
Australian living standards will recover more slowly than expected, foreseen the reserve bank and admitted that it was always wrong about an important economic assumption.
Economists at the Central Bank reduced Australia’s estimates for medium -term productivity performance in three months.
Since productivity is an important factor flowing to growth in the economy and living standards, both have been reduced by about 0.3 percent.
This rough tendency is consistent with the assumption that the increase in efficiency will suddenly decrease to 0.7 percent.
Labor efficiency is expected to improve – increased by 0.7 percent at the end of 2027 after decreasing 0.7 percent compared to last year.
The Bank admitted that the productivity results are constantly proved.
RBA personnel have assumed that our estimates have been temporarily weak and will gradually return to higher historical growth rates and continue.
“Although not more often, this did not emerge, which caused RBA to constantly predict the real results.”
RBA’s new assumption is how much extra growth rate for non-farm labor efficiency in the last 20 years-how much extra has been produced per hour.
Productivity, real household disposable income, is closely related to a rough measure of living standards.
It makes RBA more compatible with other Australian financial institutions, including the NSW Treasury, which recently revised its long -term growth assumption to 0.8 percent.
The concession comes while preparing for RBA Governor Michele Bullock to address the government’s efficiency of a round table meeting next week.
Treasurer Jim Chalmers has formed a number of experts, business leaders and unions to discuss how Australia’s tax and regulation frames can be reorganized to revive the country’s anemic productivity increase.
RBA said that the decline in the appearance was not a pessimistic sign about the expectations of the Bank’s summit.
However, it will take at least a few years for any policy changes that may result in higher efficiency to flow to the economy beyond the forecast horizon of the central bank.
RBA, thanks to the contact with enterprises, the regulation of companies and labor users are important obstacles in the abolition of efficiency, he said.
“Companies said that it is difficult to manage complexity, cumulative volume and frequency of change in regulation, especially for small companies.”
Although some businesses stated that all technologies did not increase productivity, technology was considered important to increase productivity.
Technology can increase productivity because businesses require more personnel for the adoption of the adoption, while most survey participants waited for artificial intelligence to save work in the future.
As the labor force went into higher skilled roles, lower qualified works were particularly at risk.
GDP growth is revised as a result of productivity decrease, while the appearance of inflation has not changed to a great extent, both the cut average and the title inflation is expected to hit the midpoint of 2-3 percent of the RBA target band until the end of 2027.
Because RBA assumed that the economy would quickly adapt to the lower growth in the supply capacity of the economy.
Unemployment rate is expected to be kept at a rate of 4.3 percent during the RBA’s forecasting horizon.
The Bank stated that the estimation was “close to full employment ve and reiterated that many market economists, which revealed that non -accelerating inflation rate prediction is still close to four percent.
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