RBA's Pessimistic Productivity Outlook Sparks Debate Among Economists

The Reserve Bank of Australia (RBA) has been accused of having an overly pessimistic view on productivity, according to economists.

The RBA's assumption for medium-term productivity growth is 0.7%, which is lower than the 1.2% estimated by Treasury in its Intergenerational Report.

HSBC chief economist Paul Bloxham criticized Treasury's estimate as 'unrealistically optimistic', citing the need for more housing, energy, and infrastructure to support productivity growth.

Westpac's Luci Ellis, a former RBA chief economist, countered that the RBA's forecasts might be too gloomy, requiring a repeat of factors that dragged down recent productivity outcomes.