"As vaccination rates increase further and restrictions are eased, the economy should bounce back.

"There is, however, uncertainty about the timing and pace of this bounce-back and it is likely to be slower than that earlier in the year,” Lowe added.

According to the RBA's monetary policy decision report published on Tuesday, there will be no tapering of bond buying stimulus this year. The programme will continue until at least the middle of February next year in a sign Australia’s economic recovery is due to take longer than first forecast.

 

Lockdowns in the country’s most populous states are costing around A$2 billion per week.

 

The RBA governor added that the restrictions were having a widespread impact across the nation’s economy, and would likely lead to falling growth over the next few months.

 

"GDP is expected to decline materially in the September quarter and the unemployment rate will move higher over coming months," Lowe added.

 

In addition, the Reserve Bank of Australia stated its 0.1% cash rate would not increase until inflation was between the 2% - 3% target range, which may not be seen before 2024.

 

"The economy will be growing again in the December quarter and is expected to be back around its pre-Delta path in the second half of next year," said Lowe.

 

However, according to EY chief economist Jo Masters the pace of the recovery remained uncertain: "The economy has bounced back from previous lockdowns with gusto, and that is possible this time around, but certainly not guaranteed.

"We are likely to see a much slower easing of restrictions and likely a long shadow of cautiousness which leaves a question mark on the pace of recovery,” she stated.