SYDNEY, May 5 (Reuters) - Australia will take a 10% hit to gross domestic product and the unemployment rate will likely double in the June quarter due to measures to limit the spread of the new coronavirus, Treasurer Josh Frydenberg will say in a speech on Tuesday.
The world’s 12th-biggest economy will lose about A$4 billion ($2.6 billion) every week due to restrictions on movement and economic activity, according to excerpts of the treasurer’s speech seen by Reuters.
But the impact would have been a lot worse if Australia - with more than 6,800 coronavirus infections and 96 deaths - had followed Europe’s example and imposed stricter controls on all non-essential services, he is expected to say.
“If these restrictions were increased even further, akin to the eight week lockdown in Europe, then the adverse impact on GDP could double to 24%, or A$120 billion, in the June quarter,” the treasurer will say in his prepared remarks.
“This would have seen enormous stress on our financial system as a result of increased balance sheet impairments, widespread firm closures, higher unemployment and household debt. This was the cliff we were standing on.”
Still, the economic shock from COVID-19 would be “profound and long-lasting”, with Treasury estimating the unemployment rate to double to 10% in the June quarter, Frydenberg will say in a speech to the National Press Club.
Australia’s emergency coronavirus cabinet is due to meet later Tuesday with New Zealand Prime Minister Jacinda Ardern also attending. New Zealand has reported 1,137 coronavirus cases and 20 fatalities.
The trans-Tasman neighbours are considering reopening their borders to allow air travel between the two countries, in a bid stimulate economic activity.
Australia has so far unveiled support measures worth about A$320 billion ($205.6 billion) or about 16% of GDP, as restrictions on public movement push the country toward its first recession in nearly 30 years.
The decline in cases and a COVID-19 mortality rate of just 1%, however, have led Australia to relax some curbs on non-essential movements.
Interactive graphic tracking global spread of coronavirus: open tmsnrt.rs/3aIRuz7 in an external browser.
($1 = 1.5562 Australian dollars)
Reporting by Renju Jose; Editing by Stephen Coates