The Morrison government cut its economic outlook for the September quarter, saying the contraction will be 50 per cent larger than previously flagged.
Treasurer Josh Frydenberg said he expected gross domestic product to fall by 3 per cent or more, up from his previous 2 per cent or more guidance.
His comments came after the International Monetary Fund overnight downgraded its Australian growth forecast for 2021 from 5.3 per cent to 3.5 per cent.
“That being said, there is now a light at the end of the tunnel,” Mr Frydenberg told the Citi Australia and New Zealand investment conference this morning.
He cited the IMF’s upgrade to Australia’s GDP forecast for 2022 from 3 per cent to 4.1 per cent.
“The RBA has similarly made such a forecast and we’ll be updating our numbers in the mid-year economic and fiscal outlook. Overall, I’m confident that the Australian economy will bounce back strongly, as it has done through this pandemic.”