Another $50bn is needed

THE Federal Government will need to pump at least $50bn into the economy in the December quarter to support retail conditions and market forecasts for company earnings, according to new analysis.

Citi analyst Craig Woolford says in a new report on the nation’s $320bn retail sector that retail sales conditions have been strong through the coronavirus pandemic, but are likely to slow from here, which makes retail share prices vulnerable.

And this slide could accelerate if government stimulus is pulled back, with JobKeeper set to end in September, while an end to early withdrawals from super funds will turn off a flow that has benefited retail sales.

Citi estimates that another $50bn will need to be poured into consumers’ bank accounts to support retail conditions, share prices and earnings forecasts.

The end of a program that has allowed the early withdrawal of up to $20,000 from super accounts is a bigger worry.

Under the scheme, not due to close until September, Australians were told they could take out super before they retired in two tranches: $10,000 last financial year and another $10,000 this financial year. Recent APRA data showed around $18.1bn was paid out in superannuation withdrawals from late April to June 28, and paid to 2.4 million Australians, or 20 per cent of all employees.

The super withdrawal was the largest element of cash flow movements in the quarter.

Mr Woolford said a premature end to that scheme would likely to cut household cash flow by up to 6 per cent.

The Australian