Australia’s economy may not return to pre-pandemic levels until 2022: Economist
Australia’s economy will not return to pre-pandemic levels for more than a year, an economist has predicted, amid the country’s first recession in nearly three decades.
The economy contracted by 7.0 per cent in the June quarter, confirming Australia was in recession following a 0.3 per cent decline in the March quarter.
More up-to-date data on Australia’s trade position will be released on Thursday with the international trade in goods and services report for July.
Already there are more than 1 million people unemployed for the first time because of the pandemic and Treasury predicts a further 400,000 job losses, partly as a result of Victoria’s lockdown.
BIS Oxford Economics chief economist Sarah Hunter said the road out of recession would be long, weighed down by ongoing restrictions, the winding back of payments and health concerns.
“It is clear that the path back from the COVID-19 recession will be protracted,” Ms Hunter said, indicating growth in the September quarter would be affected by Victoria’s lockdown.
“We expect it to take until early 2022 for activity to return to pre-pandemic levels,” she said.
However, Prime Minister Scott Morrison is upbeat about the prospects for the Australian economy.
“There are many more jobs still to be created and returned to Australians, and that’s what our plan will focus on,” he told parliament.
Australian Chamber of Commerce and Industry CEO James Pearson said lifting confidence in the economy was the biggest challenge facing the nation.
“The October budget is an opportunity for the government to put in place policies that support Australia’s recovery,” Mr Pearson said.
“For too long tax reform has been in the too hard basket. It must be at the top of the reform agenda if we are to achieve strong, inclusive job creating growth.”
The national accounts showed a hefty 12.1 per cent fall in household expenditure in the June quarter which included a 17.6 per cent drop in services expenditure.
On the positive side, net exports (exports minus imports) contributed a large one percentage point to the result.
Australians getting slack with social distancing
Australians are not practising social distancing with the same commitment as before, with more people admitting they don’t avoid public places.
An Australian National University survey of more than 3000 Australians, released on Thursday, revealed attention to physical distancing rules was down across the board.
Only 72.2 per cent of Australians said they had always or mostly avoided crowded places in the previous seven days, compared to 94.3 per cent surveyed in April.
Those who always or mostly avoided public places fell even further – down from 86.5 per cent to 55.8 per cent
The 1.5-metre distance rule remained a staple for the vast majority but also decreased from 96 per cent to 86.9 per cent.
“Declines were greatest outside of Victoria. But even in that state, there has been fewer people following the requirements since April,” study co-author Professor Matthew Gray said in a statement.
Masks could remain part of Melbourne life even after stage four lockdown is eased. Photo: AAP
It comes as Victorian chief health officer Brett Sutton flagged mandatory masks and Melbourne’s nightly curfew potentially remaining in place even when rules are rolled back.
Authorities remain concerned about stubborn daily case numbers, with Mr Sutton worried only about half of people with virus symptoms are getting tested.
The premier maintains numbers remain too high despite Victoria’s seven-day new case average falling below 100 for the first time since early July.
The latest deaths took the state toll to 576 and the national figure to 663.
Victoria’s lower house will rubber-stamp a six-month extension to state of emergency powers on Thursday after the bill narrowly passed through the upper house in a marathon sitting.
-with AAP
