Australia’s second biggest bank Westpac fears the coronavirus will spark the worst domestic recession in almost 40 years.
Their dire forecasts coincide with a Newgate Research survey showing one in 10 Australians had lost their job during the past week – with the layoffs occurring before the shutdown of hospitality businesses.
Westpac is forecasting a doubling in unemployment and the deepest economic downturn since 1983.
‘These widespread disruptions to the economy are on a scale that we have not experienced in recent times – which has important implications for the labour market,’ Westpac economists Bill Evans and Andrew Hanlan said.
‘The key uncertainty is the duration of the disruptions associated with the virus.’
The bank is expecting Australia’s economy to contract in the March, June and September quarters of 2020, marking the longest downturn since 1983.
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Fears of a deep recession are intensifying with one in 10 Australians revealing they had lost their job during the past week. Pictured are people queuing up outside Centrelink at Preston in Melbourne’s north
Since Monday, dine-in restaurants and cafes, pubs and clubs and gyms have been ordered to close in a bid to contain the spread of COVID-19.
Even more restrictions are coming into force from midnight on Wednesday, when a prohibition comes into effect for shopping centre food courts, cinemas, theme parks, swimming pools, casinos and massage parlours.
A Newgate Research survey of 1,000 people has revealed 10 per cent of workers reported losing their job during the past week, while 24 per cent remained employed but had lost income.
The online survey was taken on Wednesday and Friday last week as Qantas sacked 20,000 staff, or two-thirds of its employees, after Australia’s borders were closed.
Its rival Virgin Australia announced on Wednesday it would retrench 8,000 staff or 80 per cent of its workforce.
The Newgate study also found 85 per cent of respondents were worried about the economy, an increase from 77 per cent a week earlier.
Eight in 10 were extremely or quite concerned about their job, a sharp rise from 66 per cent, while 78 per cent feared a recession, up from 70 per cent.
Ordinary Australians aren’t the only ones worried about the economy falling into a recession for the first time since 1991, when gross domestic product shrank for two consecutive quarters.
Since Monday, dine-in restaurants and cafes, pubs and clubs and gyms have been ordered to close in a bid to contain the spread of coronavirus. Pictured is an empty bistro in Melbourne’s Notting Hill
Westpac is now expecting a deep recession that would see the jobless rate double from 5.1 per cent in February to 11.1 per cent by mid-2020.
This would the highest jobless rate since December 1992, in the aftermath of the last recession.
CORONAVIRUS CASES IN AUSTRALIA: 2,363
New South Wales: 1029
Western Australia: 175
South Australia: 170
Australian Capital Territory: 39
Northern Territory: 5
TOTAL CASES: 2,363
That would also see the number of unemployed more than double from 699,000 in February to more than 1.5million in little more than a year.
‘The COVID-19 crisis represents a significant shock to the Australian community and the Australian economy,’ Westpac said.
‘In prospect is a deep recession and an associated sharp spike in the unemployment rate.’
Australia avoided a recession during the global financial crisis, going backwards in just the December quarter of 2008.
‘The unfolding economic recession is shaping up to be more severe than the GFC,’ Westpac said.
In another ominous sign, the ANZ-Roy Morgan measure of consumer confidence fell a massive 27.8 per cent, to a 30-year-low, in the week ending March 12.
The data was taken before hospitality businesses were shut down but during a time when the media ran stories about toilet paper running out in supermarkets.
In another ominous sign, the ANZ-Roy Morgan measure of consumer confidence fell a massive 27.8 per cent, to a 30-year-low, in the week ending March 12 – before hospitality businesses were shut down
Even more restrictions are coming into force from midnight on Wednesday, when a prohibition comes into effect for shopping centre food courts, cinemas, theme parks, swimming pools, casinos and massage parlours. Pictured is Prime Minister Scott Morrison on Tuesday night making the announcement