June quarter to see 11 per cent unemployment and GDP contract 3.5 per cent : Westpac's Bill Evans

June quarter to see 11 per cent unemployment and GDP contract 3.5 per cent : Westpac's Bill Evans
June quarter to see 11 per cent unemployment and GDP contract 3.5 per cent : Westpac's Bill Evans

Westpac's chief economist Bill Evans have drastically changed his forecast for the June quarter given the ongoing economic crisis due to COVID-19.

He expects the June quarter will see unemployment rate will rise over 11 per cent, while GDP is expected to contract by 3.5 per cent.

"We do not expect a significant recovery until the December quarter", Evans said.

"Two weeks ago when I last spoke to you we were bold enough to say there will be a recession when most people were in denial about that", Evans said, after predicting a 0.6 per cent decline in the Australian economy in the first half of the year.

"Then four days later, when we analysed the government's first stimulus package, we said no there will still be a recession, even though most commentators thought it would be enough to avoid a recession."

Evans had previously forecast back to back 0.3 per cent quarter contractions before a 2.2 per cent growth in the second half of 2020 as the economy recovered from COVID-19.

"[The shutdowns] have changed the face of the economy quite significantly", Evans said. 

Two weeks ago Evans forecasted a seven per cent unemployment rate, but he notes things have moved a lot further, a lot more quickly than that.


Evans full update. Source: WestpacIQ.

"It will involve 814,000 job losses [over the June quarter]".

Evans suggests the September quarter is difficult to predict.

"We were pretty optimistic that we would start to see the recovery blooming in the September quarter.

"The government is now talking a six month period of shutdowns.

"We expect the September quarter will probably see  the turning point in a number of new cases of COVID-19, which will give markets a lot of encouragement, but the economy will still be very soft and the gov will be slow to release a lot of these shutdowns.

Evans forecasts no further job losses over the September quarter, but not much improvement either, which will see an 11 per cent unemployment rate at the end of September

December quarter is where Evans predicts a "substantial improvement" with the shutdowns being ceased and confidence coming back to markets.

We expect about another 350,000 new jobs at the end of December, ending the unemployment year at 8.8 per cent.

"2021 will be a year when things will gradually improve, but we're not optimistic we will see that 5.1 per cent unemployment rate anytime in the future."

Over 2020, Evans says the economy will have contracted by three per cent. 

 

 

 

 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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Coronavirus COVID-19

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