Treasury Secretary Josh Frydenberg warns that the economy is facing difficult times as coronavirus blockades in two major states of the country endanger jobs and businesses. increase.
Economists predict that the economy will shrink by up to 4 percent in the September quarter as a result of blockades in New South Wales and Victoria.
Victoria has reported that the sixth blockade will be extended beyond Thursday, further exacerbating the outlook.
The June quarter national accounts, released Wednesday, show how the economy was heading towards this expected recession.
If the June quarter results are negative and expectations are given for the September quarter, there is concern that the economy may already be in a technological recession.
Two consecutive quarters of contraction constitute a technical recession.
When asked on the Nine Network if Australia was heading into recession, Frydenberg said the median market expectation was a slight increase in economic growth.
“It’s going to be a lineball. Our economy will face very difficult days in the future,” he said.
“Our blockades in the two largest states not only sacrifice work, but also increase our debt burden and hurt people’s mental health by seeing businesses shut down. I am. “
He again urged the states and territories to stick to plans to begin to ease restrictions when double-dose Australians over the age of 16 reach 70% vaccination coverage.
At this stage, economists’ forecasts are focused on a 0.5% expansion in the June quarter, a significant slowdown after the rapid recovery from last year’s recession seen in the previous three quarters.
However, the forecast is in the low range of 0.1% reduction.
“The optics are bad and we won’t be confident in the news of another recession,” said Shane Oliver, chief economist at AMP Capital.
Economists will solidify their growth forecasts after quarterly reports spread over the next few days.
The Australian Bureau of Statistics will release the June Quarter “Business Indicators” report on Monday. This is expected to increase the company’s profits by 2.5%.
Corporate inventories, such as shelving and warehouse inventories, are also projected to increase by 1%.
International trade and government finance figures for the June quarter will be released on Tuesday.