Former Woolworths chief executive Roger Corbett has said that a recession can act as a “cleansing process” by weeding out the bad companies and separating the strong from the weak.
Mr Corbett, a board member of the Reserve Bank of Australia, said that the recession weeds out bad companies that should be allowed to fail.
“Experience has shown that economies that don’t allow that cleansing process to happen bounce along the bottom for a long time.”
But despite this, he said that there needed to be adequate safety nets to support and retail workers who lose their jobs in the process of the bad companies failing.
He also said that Australia is in a great position and is “well placed to recover from the economic slowdown” because of Chinese demand for the country’s commodity exports.
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