The Australian economy will take a “substantial and heartbreaking” hit from the coronavirus pandemic when official figures are released next week, the prime minister says.
Next week’s June quarter national accounts – which provide a comprehensive overview of the performance of Australia’s economy – are expected to confirm the nation entered the first recession in almost 30 years as a result of the pandemic.
The Reserve Bank expects the economy contracted by about seven per cent in the June quarter, following a 0.3 per cent decline in the first three months of the year.
“Our contraction will be substantial and heartbreaking,” Mr Morrison told parliament on Monday.
But he is confident the contraction will be smaller than other countries where the downturn has been even more severe – the US and Germany have declined by 10 per cent, France by 14 per cent and the UK by 20 per cent.
Mr Morrison also promised the government will get as many people back into employment as possible after new a Treasury analysis showed Victoria faces up to 400,000 jobs being lost as a result of the state’s harsh restrictions.
Official figures show in the past two months more than 340,000 jobs have been created as restrictions eased around the rest of the country.
Taking into account those still employed but working zero hours, Treasury estimates the increase has been even greater.
Of the 1.3 million Australians who lost their job or were stood down at the start of the crisis, more than half started some form of work by July.
That brought the national effective unemployment rate down to 9.9 per cent after peaking at 14.9 per cent in April.
However, the effective unemployment rate is expected to increase above 13 per cent again in the coming months, driven by Victoria’s stage four restrictions.
But Treasurer Josh Frydenberg believes there is still room for optimism, having pumped $314 billion in support into the economy alongside $48 billion from the states.
“The road will be bumpy, the road will be long, there’s great uncertainty but there’s a light at the end of the tunnel,” he told parliament.
“The jobs recovery across the rest of the country gives cause for optimism that through containing the spread of the virus and reopening the economy we will get through this.”
A separate report shows uncertainty among company chief financial officers about economic conditions has reached a record-high 92 per cent, up from 72 per cent six months earlier.
The twice-yearly Deloitte CFO sentiment survey also found more than three-quarters of respondents see some sort of revenue decrease in the second half of 2020 and nearly three in five expect revenues to be lower than their pre-pandemic expectations in 2021.
“A COVID-induced global economic downturn, the largest since the Great Depression, has hit hard, net optimism has fallen drastically, and uncertainty is at an all-time high,” Deloitte partner Stephen Gustafson said.
The government’s priority for this sitting fortnight will be getting extensions to the JobKeeper wage subsidy and the enhanced JobSeeker dole payment legislated as both were supposed to end in September.
New Australian Bureau of Statistics data showed 35 per cent of Australians were receiving a government stimulus payment as of June, up from 32 per cent in May.
Around a third were using their payment to pay household bills, while just over a quarter were adding them to their savings.