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Treasurer Flags “Sobering” GDP Drop, Largest On Record

Treasurer Josh Frydenberg says Australia has avoided the fate of other nations in navigating COVID19, however, warns local GDP will fall by over 10% in the June quarter – around $50 billion, its biggest fall on record.

Disclosed in a treasury update on Tuesday afternoon, Mr Frydenberg asserts “there is no money tree”, with the government’s economic relief to be repaid in the future.

“With $320 billion, or 16.4% of GDP in financial support, our focus is getting the country through the crisis and positioning the economy to recover on the other side.”

Australian unemployment is estimated to hit 10% in the June quarter – around 1.4 million Australians out of work.

Local household consumption is also expected to drop 16%, with business investment slipping 18% and dwelling investment also down 18%.

The Treasurer states the International Monetary Fund predicts the world economy will contract by 3% this year, down from the 0.1% shrinkage during 2009’s GFC.

Australian is said to be navigating the coronavirus pandemic better than other countries, with the country’s death rate the lowest in the OECD. A notable 280,000 have died globally.

“The combination of social distancing, lower incomes and increased uncertainty are weighing heavily on aggregate demand and flowing through to reduced cash flow,” he says.

During the same period, local household savings are tipped to increase amid cautious consumer behaviour.

Treasurer Frydenberg has also flagged that the multibillion dollar aid and stimulus spending will be reeled back soon, as it is no longer needed.

“The answer is not spending more or spending forever – the answer is that Australian businesses small, micro, medium, large will rebuild, will re-employ, will restart and engage in this COVID safe economy and do what they’ve always done.”

Practical solutions to rebuild the economy will include reselling the local workforce, industrial relations reform, slashing red tape and maintaining its $100 billion ten year infrastructure program.

Around 5.5. million Australians are formally enrolled on the JobKeeper program from 835,000 businesses.

“Theirs are the shoulders that Australians will stand on, those businesses that will provide the employment and provide the opportunities,” said the Treasurer.

Mr Frydenberg has labelled the government’s stimulus during COVID19 as the “largest and fastest injection of economic support Australia has ever seen”, underpinned by over eighty regulatory changes prompt by the crisis.

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