Scott Morrison, Australia’s PM, has warned that the tighter restrictions in Melbourne and an extended lockdown across the Victoria state to cap the gain in coronavirus cases might affect the economy drastically, cutting the 3Q GDP by 2.5 in the third quarter.
The PM also reported that the nation’s effective unemployment rate, which includes the employees reduced to 0 hours, is forecasted to top the 14% mark from the current 11%. Moreover, the unemployment rate, which doesn’t include the workers decreased to zero hours, is predicted to touch the 10% point, as estimated by the central bank earlier but more than the Treasury’s prediction of 9.25% two weeks back in the economic update.
Meanwhile, on Tuesday, Governor Philip Lowe, in his policy statement, had forecasted Australia’s output to plunge 6% over 2020 but rise by 5% next year. The Central Bank of Australia is also about to release its quarterly economic forecast update on Friday, 7th August.
Also, the South East Australian state, Victoria, is again put under lockdown, thus, isolating it from the rest of the country, due to surge in COVID cases. Notably, the state accounts for almost 25% of the total Australian GDP and is second most populated of the country too. Further, the state has implemented a strict curfew from 08:00 in the evening to 05:00 in the morning. The state’s capital city, Melbourne, which is home to approximately 5 million people, is encountering even harsh restrictions on retail, construction, and manufacturing.
The primary concern of the government and the country is that spread of the virus from states like Victoria to other places will dampen the confidence and urge people to halt investing and hiring in the country.
Australian PM reported that the Treasury department’s estimates would be updated in October.