##gged. it is the only component of canada ’ s gdp that remains below its pre - recession peak. our annual exports are more than $ 100 billion lower than would be typical at this point in a recovery cycle. regaining the lost output of companies that have disappeared or downsized will require that existing firms boost their production, that they invest to expand their capacity, and that the net creation of new firms resumes a higher growth path. the good news is that the balance sheets of corporate canada are healthy and the capacity to invest exists. we could see that the recession was causing a significant structural change in the canadian economy at the time. the bank acknowledged that this destruction of potential was happening in its quarterly monetary policy report in april 2009. reflecting its best judgment, the bank reduced its estimates of potential output growth in each of the years from 2009 to 2011. nonetheless, we were relatively fortunate in canada. in the immediate aftermath of the crisis, stimulative monetary and fiscal policies proved highly effective in maintaining domestic demand, particularly household expenditures. household spending was supported by strong growth in borrowing, which resulted in record - high debt - to - income levels. given the circumstances, it was a good thing that households had the capacity to expand their spending – this provided a necessary cushion from the worst effects of the global contraction. the bank has been careful to remind people that interest rates will rise at some point. we have urged homeowners and other borrowers to do the arithmetic to ensure that they will be able to manage their debts at more normal interest rates. i am confident that this is exactly what people are doing. this growth model has been effective, but its limits are clear. in fact, while recent data are choppy, we continue to see a constructive evolution of activity in the housing sector. what needs to happen next is for export momentum to build and business investment to recover while the household sector settles into a more balanced and sustainable growth path. for all of this to happen will require the rebuilding of canada ’ s economic potential. that is what makes this recovery cycle unique. automotive sector let me use some cases studies to illustrate this. the structural transformation of the auto sector has been dramatic. the 70 - per cent decline in production from peak to trough was brutal. machinery was boxed up and sent overseas. plants closed. these were very hard times for this sector and those who make their living from it. the crisis in the auto sector prompted the federal government to step in with extraordinary financial support

, but it is possible that australia can sustain unemployment rates below what we have had over the past 40 years. if so, this would be a very good news for both the economy and our society. notwithstanding these outcomes, the issue that has defined my term more than any other is the forward guidance about interest rates that was provided during the pandemic. that guidance was widely interpreted as a commitment, rather than a conditional statement, that interest rates would not increase until 2024. as you know, interest rates started being increased in may 2022 and there has been much criticism since, especially by those who borrowed during the pandemic based on our guidance. there is a lot to be learned from this experience, including about how to communicate in uncertain times. but i ask that people keep in mind the circumstances we faced in 2020. it was a very scary time. an unknown virus was sweeping the world, our international borders were closed, people couldn't move across state lines, we were being told to stay in our homes, temporary morgues were being set up, and a vaccine was thought to be years away. there were credible projections that the unemployment rate would rise to 15 per cent and that there would be a deep and lasting economic contraction. and even well into 2021 large parts of country were still in stringent lockdowns. the government and the rba responded forcefully to the pandemic. at the rba, we wanted to do what we could to build a bridge across to better times and to provide 2 / 7 bis - central bankers'speeches some insurance against the very worst outcomes. i know that the government had a similar mindset. this approach worked. the australian economy avoided falling into the abyss and then bounced back well. with the benefit of hindsight, my view is that we did do too much. but hindsight is a wonderful thing. none of us can predict the future and we have had to make decisions under great uncertainty and with incomplete information. we got some things right, but we got other things wrong. i can assure you, though, that the staff of the rba and members of the reserve bank board have been relentless in their pursuit of doing the right thing and supporting the economic prosperity of the people of australia. and i will leave the rba after 43 years proud of our contribution to the stability of both our economy and financial system. without a crystal ball, i have found it helpful over the years to return to some fixed points.