Bangkok Post

Australia’s GDP expected to shrink by 10%

Government unveils ‘job keeper’ payments

-

SYDNEY: Australia faces a 10% economic contractio­n in the March quarter as shockwaves from the coronaviru­s pandemic rip through the economy, the head of the Commonweal­th Bank of Australia, the country’s largest lender, warns.

Citing data from the bank’s live payments system, CBA chief executive officer Matt Comyn said that consumptio­n has fallen heavily in recent weeks as widespread restrictio­ns on the movement of people have hit demand.

“Probably a base case for the March quarter would be something in the order of a 10% contractio­n in the economy,” he said in a video conference hosted by the Australian Financial Review yesterday.

Comyn said a week or so ago that he would have probably estimated a contractio­n of 5% to 6%.

Australia has rolled out increasing­ly restrictiv­e measures to combat the spread of coronaviru­s. Around 4,200 people have tested positive nationally, and the death toll stands at 18.

The A$2 trillion (US$1.2 trillion) economy has dodged a recession since the early 1990s but surging unemployme­nt and higher loan losses are likely to cripple growth in what could be the country’s steepest economic downturn.

More than 100,000 Australian workers have already been stood down as retailers and restaurant­s shut shop, leading to ever longer queues outside the country’s welfare office.

Australia’s biggest banks are watching the impacts play out as they offer deferral periods on loans to beleaguere­d industries and consumers.

When asked if Australia’s economic contractio­n in the June quarter could be in the order of 25% as some predict for the US economy, Comyn said it was “certainly possible.”

“Of course, I hope it does not come to that. And I think that is why the government has and will continue to put in place very substantia­l measures to enable businesses to stay intact.”

Australia is battening down the hatches to prevent a scarring economic crisis, with the country’s central bank take a foray into quantitati­ve easing after reducing interest rates to a record low of 0.25%.

The government has also rolled out three fiscal stimulus packages totalling A$320 billion, with the latest yesterday offering “job keeper” payments to companies to help them keep people employed.

Economists, in general, are predicting that Australia’s unemployme­nt rate will soar above 11% by June and annual economic output will shrink by 3% in 2020.

The most recent data showed Australia’s economy expanding by 2.2% in the December quarter from a year earlier, while the jobless rate fell to 5.1% in February.

 ?? AFP ?? Near-deserted streets are seen in the central business district of Sydney yesterday.
AFP Near-deserted streets are seen in the central business district of Sydney yesterday.

Newspapers in English

Newspapers from Thailand