Australia's economic downturn is not as bad as the Reserve Bank thought it would be a few months ago, partly because the country was in a much better position going into the coronavirus crisis than other nations.
Governor Philip Lowe says the economy is benefiting from the way the government has responded to the pandemic, and the outlook has improved.
The COVID-19 pandemic has been much milder in Australia with only 102 people dying from the disease, compared to thousands, or tens of thousands in some other countries.
This has allowed state governments to lift many restrictions after three months, helping the economy to get back on track.
"Three or four months ago I thought hours worked in Australia could fall close to 20 per cent, I think the number now is more like 10 per cent, so it's not nearly as bad as anticipated," Dr Lowe told the ANU Leadership forum in Canberra.
He said there will be a shadow over the economy that might last for years, with consumer confidence and business confidence slow to return unless regulation reforms are undertaken.
"I've been encouraged recently that the government has moved in a number of areas, it's talked about industrial relations, it's talked about infrastructure and it's talked about the need to reduce regulation," Dr Lowe said.
"I fear if we don't leverage the advances in technology and we don't see policy reform we'll just go on and meander, and kind of have slow growth and slow growth in incomes."
Dr Lowe said the way the government has responded to the health crisis in the recent months shows there's a capacity for it to make economic reform.
"Australia has done remarkably well over the past few months compared to other countries, both on the health front, the political cohesion and the economic front," he said
"That should give us more confidence that we'll meet the economic challenges as well."
The RBA governor also said he's comfortable with the Australian dollar's current level, despite it rallying almost 10 US cents since the beginning of April.
"At the moment it's hard to argue that the Australian dollar is overvalued," he said.
"At some point, it's true that could be a problem but I don't think we've reached that point yet."
Australian Associated Press