Scott Morrison has warned the lockdowns in three Australian states will be a heavy blow for the economy, but the prime minister is confident the country will quickly recover.
Around half the population is currently in lockdown due to restrictions in Greater Sydney and some parts of regional NSW, as well as Victoria and South Australia.
Greater Sydney and Melbourne alone account for about half of the economy’s output.
“The economic impact of this, of course, will be a heavy blow,” Mr Morrison told reporters in Canberra on Wednesday.
“But it’s not a blow we can’t recover from … because last year when we faced the same heavy blow, we turned it around and got a million people back into work.”
He said the Reserve Bank governor and his deputy agree that while the lockdowns will impact the September quarter, a turnaround can be expected in the December quarter.
The Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months into the future, eased further in June, but still points to annual growth above trend of around 2.8 per cent.
Westpac chief economist Bill Evans is forecasting the economy will contract by 0.7 per cent in the September quarter.
“We expect the economy to bounce back once measures bring outbreaks under control, with the December quarter expected to show a 2.5 per cent rebound nationally,” he said.
But independent economist Nicki Hutley isn’t as confident, saying another recession – or two consecutive negative quarters – can’t be ruled out.
“This Delta virus just seems almost unstoppable. You have seen how difficult it has been for NSW to get on top of it,” she told ABC radio.
“If we can’t do that very quickly, this could drag on. That is the worst-case scenario.”
NSW announced 110 new local cases on Wednesday, the third highest day since this outbreak began, with at least 60 of those people having been circulating for part or all of their infectious period.
The impact of multiple lockdowns was evident in the latest retail trade figures, falling by a hefty 1.8 per cent in June.
Australian Bureau of Statistic preliminary retail figures showed all industries except for food retailing declined in June.
“Lockdowns have a direct impact on consumer confidence and retail spending, and we fear the worst is yet to come with restrictions imposed across multiple states in July,” Australian Retailers Association CEO Paul Zahra said.
ABS director Ben James said June’s fall in turnover reflected Victoria’s previous lockdown which gradually eased from June 11, while Greater Sydney saw stay-at-home orders issued towards the end of the month.
“Other states and territories saw interrupted trade due to mini-lockdowns, as well as reduced mobility between states with the tightening of border restrictions.” Mr James said.
Despite this monthly decline, the ABS estimates sales for the June quarter to rise 1.3 per cent after the 0.1 per cent decline in the previous three months, a positive outcome for the national economic growth result.
Meanwhile, the National Skills Commission’s final vacancies report for June confirmed job advertisements posted on the internet fell 0.5 per cent in the month, the first decline since the pandemic low point in April 2020.
However, jobs ads were still 43.8 per cent higher than their pre-pandemic levels.
Declines were recorded in five of the eight occupational groups monitored by the commission, and in three states and the Northern Territory.