- Australian unemployment will hit 11% by Christmas, according to the latest Treasury estimates.
- Including those on zero hours and who have dropped out of the workforce entirely, it would place the effective unemployment rate above 13%.
- The revision comes as Victoria extends and toughens its lockdown measures, estimated to cost up to $12 billion alone.
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If it weren’t already plain to see, the federal government has confirmed Australia is in for some dark days ahead.
In revising its economic forecasts on Thursday, Treasury painted a darker outlook as the coronavirus crisis looks to be far from over.
Just a fortnight ago, Josh Frydenberg had unemployment peaking at 9.25% before Christmas. With Victoria’s six week lockdown both strengthened and extended since then, unemployment is now set to hit 10%.
Unfortunately, even that betrays the reality of the situation on the ground. With many likely to have given up the job search altogether, the effective unemployment rate is set to hit nearly 14%, up from 11% in August.
That means the number of unemployed Australians will have effectively doubled in the space of nine months.
That’s despite massive economic support, including an $87 billion JobKeeper wage subsidy due to keep hundreds of thousands more Australians from joining the unemployment line until March next year.
The resurgence of virus numbers in Victoria has played no small part in the bad set of numbers. The initial lockdown 2.0 was predicted to cost between $3 billion and $5 billion. Treasury now expects the bill to rise to $10 billion and $12 billion if it goes exactly to plan.
Further extensions or outbreaks in other states will see that number rise higher still.
With 471 cases recorded in Victoria on Thursday, daily numbers are at least down from 700-odd. Still, as the state, representing around one-quarter of the national economy, grinds to a halt, it looks set to dash hopes of a recovery.
Already it’s expected to wipe 2.5% from the September quarter figures. It suggests Australia’s recession could drag on even longer as the country’s GDP shrinks again in December and potentially into the new year.
While Thursday’s revised numbers are definitively not good, they may just the latest in what could be a long list of bad reads.
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