Australia Set to Regain 60% of GDP Lost Once Restrictions Eased
Australia Set to Regain 60% of GDP Lost Once Restrictions Eased
(Bloomberg) --
Australia will regain about 60% of monthly gross domestic product lost from the coronavirus lockdown once it reaches the final stage of the government’s three-stage relaxation of restrictions.
In a statement to parliament Tuesday, Treasurer Josh Frydenberg will say the easing of the lockdown in line with steps 1, 2 and 3 of the program sees GDP climb by A$9.4 billion ($6.1 billion) a month.
That equates to around 60% of the hit to GDP arising from measures taken to contain the virus, according to James McIntyre, Australia economist at Bloomberg Economics. A range of restrictions will remain in place once Step 3 is reached to prevent a re-emergence of the outbreak. McIntyre estimates these restrictions equate to A$6 billion-7 billion per month in lost economic activity.
“With the progress on the health front seeing the curve flattened and the daily increase in the number of coronavirus cases fall from more than 20 percent a few weeks ago to less than half a percent today, National Cabinet agreed to a three step framework to achieve a COVID-safe Australia and the lifting of restrictions by July,” Frydenberg said.
Australia’s three-stage plan for reopening the economy is being followed by the eight state and territory governments at their own pace. But, Prime Minister Scott Morrison is aiming for completion of the three steps by the end of July.
The Reserve bank of Australia, in its latest quarterly economic outlook released Friday, predicted the economy would contract by around 10% over the first half of this year and expects the unemployment rate will soar to around 10% next month.
It has joined with the government in assembling a monetary-fiscal package worth 16.4% of GDP. Frydenberg said Treasury estimates that reaching Step 3 will see 850,000 people back at work.
“Rebuilding consumer and business confidence will be key as the nation’s finances can only be sustained by a strong and growing market-led economy,” Frydenberg said.
©2020 Bloomberg L.P.