SYDNEY (Reuters) - The re-introduction of measures to halt the spread of the coronavirus in Australia’s second largest state will shave 0.75 percentage points off the country’s economic output in the third quarter, a government source familiar with official estimates said on Wednesday.
Victoria state earlier this month told nearly 5 million people they would need to stay home for six weeks, permitted to leave only for essential business, as authorities struggle to contain a flare-up of coronavirus cases.
The shutdown has dashed any hope that Australia’s A$2 trillion ($1.4 trillion) economy will rebound quickly. It is facing its deepest economic shock since the Great Depression with the unemployment rate at a 22- year high.
Facing a prolonged economic downturn, Australia said on Tuesday said it would spend A$16.8 billion to extend its wage subsidies for businesses hit by the coronavirus pandemic.
The six-month extension of the programme allays fears of a hard end to the current A$70 billion scheme, but most economists expect a significant economic contraction.
Westpac earlier this month downgraded its forecasts for growth to a 4.2% contraction in 2020 from a 4% fall previously.
Reporting by Colin Packham; Editing by Jacqueline WOng