I’m becoming the Cassandra of resume writers, business services and employment experts but the Australian economy won’t ‘bounce back’ any time soon.
There was talk of “snap back” from the prime minister and treasurer last month.
But the economy was in a slump before the virus hit with productivity growth, household incomes and domestic private sector consumption, all comatose.
The Covid-19 induced recession is the worst we have seen since the Great Depression.
Last week the IMF issued a revised set of estimates for GDP growth for this year and the next. And there was some good news.
The Treasurer tweeted that, “Australia is the only developed nation to have its 2020 growth forecast upgraded by the IMF.”
This is true. In April the IMF forecast our GDP this year would fall by 6.7%; now it estimates it will “only” fall by 4.5%.
Under these latest forecasts Australia’s economy next year would be 0.7% smaller than it was last year. That is the first time since 1983 that our economy would be smaller than it was two years earlier.
By the end of next year we will still be tracking 5.3% below where we were expected to be.
That is the equivalent of around $105bn less being produced – or roughly the total amount produced in a year by the entire manufacturing industry.
That is bad news for job seekers.
If the economy was to keep growing at (a very strong) 4%, it would take us until 2025 to get back to where we were before the virus. If it grows at the more realistic 3% from 2022 onwards, we won’t get back on par until well into the 2030s.
Forget “fundamentals being strong” and “sensible budget management”. It was spin then; it’s just embarrassing cow faecal matter now.
The Government doesn’t plan to announce what it’s doing with the JobKeeper and JobSeeker payments until a mini-budget due on July 23. This will also include detailed Treasury forecasts on economic growth, unemployment, deficit and debt ahead of a full budget in October.
Policy debate needs to call a spade a spade so we can dig ourselves out of this hole.