The Aussie economy “will be hit hard” according to the head of Australian economics at the Commonwealth Bank.
Gareth Aird said the Australian economy should start to rebound in late 2021.
However, it is the unemployment rate that is set to suffer significantly, according to Aird, with the bank expecting 300,000 jobs to be lost in NSW alone.
“Employment will decline significantly over the next few months because of the lockdown in Greater Sydney – we expect a fall in employment of 300k in NSW with the bulk of the job losses showing up in the August labour force survey,” Aird said.
“Unemployment will rise more modestly than the fall in employment would suggest as the vast majority of people who are stood down in NSW will exit the labour force temporarily, as was the case last year.”
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This means that the loss of jobs will only be temporary as once the population is vaccinated and the lockdowns are over, many will be able to return to their previous jobs.
CBA is now forecasting that the unemployment rate will peak at 5.6 per cent in October 2021 and to be 5.2 per cent at the end of 2021.
The most recent jobs numbers showed unemployment dropping to 4.9 per cent prior to the current lockdowns.
“We appeared very much on course to end the year with an unemployment rate of around 4.5 per cent and the vast majority of the adult population vaccinated. Australian exceptionalism would once again shine and the world would look upon us with envious eyes and wonder how exactly we pulled it off,” Aird said.
“That idyllic scenario, however, has not materialised and the economy has hit a major pothole before we’ve reached the vaccine finish line. The COVID‑19 situation in NSW in particular has significantly altered the economic landscape in the near term.”
Aird said prior to the recent delta outbreak in NSW the country looked to be on track to achieve an unemployment rate below 4.5 per cent, establishing Australia as “the lucky country”.
“Economic outcomes were strong, COVID‑19 was by and large not circulating in the community and the vaccine rollout was moving forward, albeit slowly,” Aird said.
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Australia is now facing a second recession since the reemergence of community transmission in the past month.
Stephen Koukoulas said the Morrison government’s unwillingness and inability to procure enough vaccinations means Australia is last in the industrialised world in terms of its vaccination roll-out.
“As a result, people are vulnerable to COVID-19 and it is spreading around much of Australia unless huge swathes of society are locked down,” Koukoulas said.
“Health experts say that if more Australians had been fully vaccinated for COVID-19, the current outbreak would not have been as severe.”