Australia Is Heading Into Its Deepest Downturn in Almost 100 Years
It’s likely to take years for wage growth and inflation to bounce back.
A lone pedestrian walks outside the Sydney Opera House during a partial lockdown imposed due to the coronavirus.
Photographer: Brendon Thorne/BloombergAustralia appears to have succeeded in flattening the coronavirus curve, but such an optimistic health outcome won’t prevent the economy from experiencing a deep downturn. Our base case anticipates the largest contraction since the 1930-1931 Great Depression.
Significant stimulus — both monetary and fiscal — is cushioning households and helping businesses to survive and retain workers. Despite this, Australia’s small open economy has already seen considerable damage and faces headwinds from subdued global demand and trade. Significant monetary-fiscal coordination to provide further stimulus will be required to recover the economy over the years ahead.