Australian central bank chief fears 10% shrink in GDP, surge in unemployment rate

22, Apr. 2020

Sydnery (Photo by Kate Trifo on Unsplash)
Sydnery (Photo by Kate Trifo on Unsplash)

SYDNEY, NNA – Australia’s central bank chief said Tuesday the country’s GDP would shrink 10 percent this year and the unemployment rate may shoot up to around 10 percent due to the heavy impact of the global coronavirus pandemic.

“National output is likely to fall by around 10 percent over the first half of 2020, with most of this decline taking place in the June quarter,” Philip Lowe, the governor of the Reserve Bank of Australia, said in a statement.

“Over the first half of 2020 we are likely to experience the biggest contraction in national output and income that we have witnessed since the 1930s,” he said.

The central bank governor cited that many normal activities are restricted or not permitted and there is a high level of uncertainty about the future with many households and businesses holding back spending and investment.

"The unemployment rate is likely to be around 10 percent by June,” said the governor, adding, “it might be lower than this if businesses are able to retain their employees on lower hours.”

He predicted that total hours worked in Australia are likely to decline by around 20 percent over the first half of this year.

Australia has seen continuous gross domestic product growth since 1992, according to data of RBA and the World Bank.

As the economic data roll in over the coming months, they will present a very sobering picture of the state of our economy, Lowe said, adding there will be many reports of record declines in economic activity.