In an open letter addressed to the Prime Minister and his cabinet, economists including former Treasury and RBA officials and prominent academics warn the government that while the measures have come at a cost to economic activity, these are far outweighed by the lives saved.
“The measures put in place in Australia, at the border and within the states and territories, have reduced the number of new infections. This has put Australia in an enviable position compared to other countries, and we must not squander that success,” the letter, which has been signed by over 200 economists and growing, reads.
The letter comes as debate heats up about whether measures should be relaxed.
Last week, the PM signalled some restrictions could be eased as early as next month, with a number of commentators expressing the view that there is a trade-off between the public health and economic aspects of the crisis.
However, the 200-plus economists believe “this is a false distinction”.
“We cannot have a functioning economy unless we first comprehensively address the public health crisis.”
Warning that a second-wave outbreak could be extremely damaging to the economy, involving tragic and unnecessary loss of life, the economists ask the PM to maintain measures.
“As has been foreshadowed in your public remarks, our borders will need to remain under tight control for an extended period.
“It is vital to keep social distancing measures in place until the number of infections is very low, our testing capacity is expanded well beyond its already comparatively high level, and widespread contact tracing is available.”
Late last week, the IMF said that while Australia’s GDP is forecast to fall by 6.7 per cent this year (the worst fall since the Great Depression), it is expected to rebound just as fast, growing by 6.1 per cent in 2021.
As expected, job loss, too, is expected to spike, with the Treasurer confirming last week that figures will reach 10 per cent in the three months through June, from 5.1 per cent in February.
“The economic shock facing the global economy from the coronavirus is far more significant than what was seen during the global financial crisis,” Josh Frydenberg said in a statement.
“Businesses across a range of industries have had to close their doors and others have seen a significant drop in activity as countries, including Australia, exercise social distancing measures to contain the spread of the virus.”
The Treasury’s unemployment forecast was released ahead of the March labour market data, with economists suggesting the economy has shed 30,000 jobs, lifting the jobless rate to 5.4 per cent last month.