Economy to bounce back strongly: PM

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)


Scott Morrison expects the Australian economy will bounce back strongly as coronavirus restrictions ease across the nation, allowing people to return to work.

The prime minister joined in the fanfare of the nation’s largest economy, NSW, reopening on Monday after more than one hundred days of lockdown.

“As we open up, the economy will bounce back strongly,” Mr Morrison told reporters in Canberra after leaving two-weeks of isolation in The Lodge following an overseas trip.

“People will be back in work and we will see that month after month after month, as we get more and more people back at work, back in jobs, back in the economy.”

The ACT is due to start easing its COVID-19 restrictions on Friday, while Victoria will emerge from lockdown later this month.

Treasurer Josh Frydenberg says the economy has been hit hard by the Delta variant, with lockdowns in NSW and Victoria costing around $2 billion a week.

Experts expect the economy contracted by as much as four per cent in the September quarter.

Figures due later this week are also expected to show the damage this has caused the labour market, with economists predicting another 100,000-plus jobs were lost in September.

“Once obstructions are raised, businesses reopen and the kids get back to school and people get back to work, that’s what we are hoping for, that’s what we expect,” Mr Frydenberg told the Seven Network.

But Business Council of Australia chief executive Jennifer Westacott says once states open they need to stay open.

“If there is any sense of statewide snap lockdowns, that’s very problematic,” she told Sky News.

“The second thing we need to do is keep these state borders open. The third thing is to start getting skilled workers in.”

Such hopes come as forecasts by Deloitte Access Economics showed the economy would grow by 4.5 per cent in 2022 after a 3.2 per cent expansion over 2021, which Mr Frydenberg says is stronger than predicted in his May budget.

But Deloitte Access Economics partner and economist Chris Richardson says while he expects an excellent recovery over 2022, much will depend on vaccination rates.

“Forecasts for everything from wages to unemployment to hospitalisation and haircuts depend on vaccination,” he said in his latest quarterly business outlook.

Even so, Mr Richardson believes a large lift in wages growth is still “miles off”.

Shadow treasurer Jim Chalmers was unimpressed.

“After all Australians have sacrificed during this pandemic, their reward from Scott Morrison and Josh Frydenberg is slower wages growth for longer,” Dr Chalmers told AAP.

A Westpac survey of 1000 small- to medium-sized businesses across Australia found that 85 per cent believe the economy will quickly return to growth as restrictions ease, and 70 per cent expect increased sales in the next 12 months.

“Small businesses have been through an incredibly tough time and, while challenges remain, it’s extremely encouraging to see so many business leaders feeling optimistic about the future as Australia prepares to reopen and recover,” Westpac chief executive consumer and business banking Chris de Bruin said.

However, a separate survey by accounting body CPA Australia was less optimistic, with just 32 per cent of the 144 accountants surveyed confident in the performance of the economy over the next three months, while 42 per cent were worried about the outlook.

“We think this reflects ongoing uncertainty about re-opening requirements and what they’ll mean for businesses, their employees and customers, as well as how future outbreaks will be managed,” CPA Australia chief executive Andrew Hunter said.


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