According to the Reserve Bank of Australia’s Governor Philip Lowe, Australia is set to avoid another recession, despite the countries recent economic comeback being halted by the number of new lockdowns introduced across the country to stop the spread of the Delta covid-19 variant.
Mr. Lowe believes that Australia’s economy will bounce back quickly once covid restrictions are eased.
“Increase in unemployment is expected over the months ahead, although mostly through decline in hours worked rather than job losses. How large depends on duration of the lockdowns. An increase in unemployment is expected over the months ahead. Once restrictions are lifted, spending will bounce back strongly,” said the Reserve Bank of Australia’s Governor Philip Lowe.
Timing is difficult to predict, but it’s likely to happen well before the end of the year. By the end of the year, many of us will be vaccinated and hopes restrictions will be eased into next quarter and as that happens, the economy should begin its recovery,” continued Mr. Lowe.
The current lockdown mean GDP is likely to decline in the September quarter.
In comparison, Federal Finance Minister Simon Birmingham didn’t rule out a recession when talking to the media on Friday morning 6th August.
“We can’t foresee exactly what’s going to happen with Covid-19 and the Delta variant. Our economic assistance has shown its ability before to carry Australians through these tough times and to help our economy recover quickly and strongly afterwards,” said Finance Minister Simon Birmingham.
A report released by the Treasury in the first week of August 2021 discovered the economic cost behind the nation’s pathway out of the pandemic.
The report states that as vaccination rates rise, less restrictions will be required to manage outbreaks which would reduce the economic cost associated with the pandemic.
The report outlined that at 50 percent vaccination rates, the economic cost of minimising cases is estimated to be about $570 million a week.
The economic cost decreases to $200 million a week at a 70 percent vaccination rate and $140 million per week at an 80 percent vaccination rate.
Greater Sydney Region Set To Result 300,000 Job Losses
The significant amount of economic damaged caused by the covid-19 outbreak in Sydney is starting to show up in the national employment data, and is unfortunately beginning to spill over into over states.
Figures published by the Australian Bureau of Statistics (ABS) illustrate that across Australia, women are losing jobs at a faster rate than men, while the youngest and oldest workers are losing jobs the fastest, as in previous lockdowns.
Between Saturday 3rd July and Saturday 17th July, the number of payroll jobs dropped by 2.4 percent on a national scale
The majority of those job losses occurred in New South Wales, where jobs declined by a much larger 4.4 percent.
“Payroll jobs” are tracked by the Australian Tax Office’s single touch payroll system.
Commonwealth Bank’s economics team is predicting that the national unemployment rate to jump in coming months, from 4.9 percent in June to 5.6 percent in October.
Payroll Data Shows Job Losses Across The Country
The period covered in this latest payroll data coincided with school holidays in every state and territory, so that has to be taken into account.
However, the data has captured the impact of the second and third weeks of the Greater Sydney lockdown, increased covid-19 restrictions in various regional parts of NSW, and the first two days of Victoria’s short lockdown in July.
Crucially, the data did not capture the restrictions imposed on the construction industry in NSW, because those were implemented after Saturday 17th July.
It will also take a few weeks before the payroll data captures the sixth lockdown in Victoria, which was announced on Thursday 5th August.
Commonwealth Bank is estimating NSW will record 300,000 job losses in the next couple of months due to the “extended lockdown” in Greater Sydney.