Australia will have a better economic outcome in the coming months if Australians ensure they keep spending and investing, according to Reserve Bank of Australia (RBA) governor Philip Lowe.
Lowe said the nation's recovery will depend on how willing people and businesses are to draw on the accumulated financial buffers to spend and invest.
"One of the many unique features of this recession is that it has been associated with a big increase in household saving," Lowe said.
"Normally in a recession, income falls and many people draw on their savings to get through the hard times. But in the June quarter, when fears about the pandemic were at their peak, the household saving rate surged to 20%, the highest in almost 50 years."
|Sponsored by BlackRock|
Looking to build resilience into your portfolio?
Lowe said another major factor that will impact the shape of Australia's recovery from the crisis is the "shadow" that has been cast by what he said has been a very uneven recession.
"All recessions are uneven, but this one has been especially so. The government has wisely sought to even things out, but inevitably we are left with outcomes that are very uneven across the country," Lowe said.
"This unevenness is especially evident in the labour market...The job losses have been largest for young people, with around 500,000 people under 35 losing their jobs in the early stages of the pandemic, and around 300,000 still out of work in August."
Lowe said the heavy burden partly reflects the uneven way the pandemic has affected different industries.
"The hospitality industry - in which many young people and women work - has been worst affected, with almost 300,000 job losses between February and May," he said.
"There has been an encouraging recovery of late, and for this to be sustained our economy will need to open up further. In contrast, a number of other areas - including the finance industry, the public sector and mining - have been much less affected."
Lowe said the consequences of this have caused people in lower income jobs to be hit the hardest.
In addition, those who run small businesses have suffered the negative effects of this recession more so than those in large business.
The central bank found that as at mid-September, the number of people on the payrolls of firms with at least 200 employees was down just 1% on the level of mid-March.
While, in contrast, payrolls are down 7% on average for firms with between 20 and 200 employees, with a similar decline for firms with fewer than 20 employees.
Read our full COVID-19 news coverage and analysis here.