Speaking at a press conference, Prime Minister Scott Morrison shared the Treasury’s latest estimates, revealing that the additional restrictions in Victoria in August and September are estimated to reduce the size of the real economy in the September quarter by between $7 billion and $9 billion.
“This is a heavy blow,” the PM said.
“Eighty per cent of this economic cost is expected to be in the affected areas of Victoria, of around $6 billion to $7 billion in that state.”
He explained that according to the Treasury’s preliminary figures, the combined effect on GDP of the stage 3 and 4 Victorian restrictions through the September quarter is expected to be between $10 billion and $12 billion, shaving some 2.5 per cent from quarterly real GDP growth.
Unemployment is now expected to peak at about 10 per cent, above the previously forecast peak of 9.25 per cent.
Of greater concern, however, is effective unemployment, which will increase by 250,000 to 400,000 due to the Victorian lockdowns.
“We know the measured headline of unemployment rate does not tell the full story of what’s happening with people’s jobs, and I have been very candid with people about that,” the PM said.
“Now, that isn’t necessarily people who have lost their employment, but it also includes those whose employment has been reduced to zero hours.
“But as I said, the effective unemployment rate is the one we’re watching.”
He said estimates now put the effective unemployment rate “in the high 13s”.
The Treasurer is expected to give more concrete economic projections in the October budget.