Invest
Economic recovery to slow, job losses set to rise
The Treasury department believes the economic recovery from the COVID-19 pandemic will be moderate, while job losses will rise when the JobKeeper subsidy ends.
Economic recovery to slow, job losses set to rise
The Treasury department believes the economic recovery from the COVID-19 pandemic will be moderate, while job losses will rise when the JobKeeper subsidy ends.
During an economics legislation committee, secretary to the Treasury Dr Steven Kennedy confirmed that between 100,000 to 150,000 Australians will lose their jobs once the JobKeeper wage subsidy ends at the end of March.
However, he noted the numbers needed to be put into context, with up to 400,000 people a month moving into or out of employment.
“In summary, JobKeeper has played a crucial role in supporting the economy and driving the recovery,” Dr Kennedy said.
“In our view, it is appropriate for the program to end as other support measures take effect and to allow the economy to continue adjusting.”
The Treasury pointed out that the current 5.8 per cent unemployment rate as of February outperformed their mid-year budget review, when the anticipated unemployment rate was projected to reach as high as 7.5 per cent.
He also noted that Australia’s unemployment rate will continue to fall in the coming months, confirming it needs to get below 4.5 per cent before meaningful wage increases occur.
However, he said there was a shift in where unemployment needed to be before wages started to grow and inflation pressures started to return.
Dr Kennedy highlighted the non-accelerating inflation rate of unemployment or NAIRU, which is traditionally impacted by employment scarring during a downturn, is likely to be ‘less pronounced’.
“Following the stronger and faster than expected recovery in the labour market, we are optimistic that the risk of persistent employment impacts (or scarring) from the COVID-19 shock is not as significant as we had previously feared,” he explained.
However, the Treasury secretary pointed out that despite Australia’s rapid recovery, the unemployment rate still needed to fall to grow the economy.
“The extent to which the unemployment rate can be lower before inflation pressure arises will be an ongoing consideration for the government.
“Our current range falls between 4.5 to 5 per cent, compared with 5 per cent previously,” Dr Kennedy said.
Dr Kennedy said the economy has now recovered 85 per cent of the decline from its pre-COVID level of output but expects economic growth to be ‘moderate’ after a strong recovery from the downturn in the second half of last year.
“While the economy is recovering strongly, well supported by fiscal and monetary policy settings, we are well below our pre-pandemic economic growth path and it will take some time to fully recover,” Dr Kennedy concluded.
RELATED ARTICLES
About the author
About the author
Economy
Australia’s inflation surges amid Iran conflict, prompting potential RBA rate hike
Australia's economy is grappling with a significant surge in inflation, driven by the escalating conflict in Iran, which has sent energy prices soaring. The latest Consumer Price Index (CPI) figures ...Read more
Economy
Inflation surge prompts calls for RBA interest rate hike
In light of the latest Consumer Price Index (CPI) data, inflation in Australia has surged, sparking discussions among financial experts about the potential need for an interest rate hike by the ...Read more
Economy
State Street economist warns of potential rate hikes as labour market remains robust
In the wake of the latest Labour Force data release, financial experts are weighing in on the implications of Australia's persistently strong labour market. State Street, a global leader in financial ...Read more
Economy
Australia and Korea urged to deepen ties amid escalating fuel crisis
As tensions in the Middle East escalate, Australia and South Korea are being called upon to strengthen their existing trade and investment ties to navigate the ongoing global fuel crisisRead more
Economy
Inflation figures steady as labour market shows resilience
In a landscape marked by economic uncertainties, the latest inflation data has been met with cautious optimism by industry leaders. The inflation rate has edged down slightly to 3.7%, a development ...Read more
Economy
RBA cash rate decision sparks expert analysis on potential impacts
The Reserve Bank of Australia (RBA) has caught the attention of financial experts worldwide with its latest monetary policy decision, signalling potential shifts in the economic landscapeRead more
Economy
RBA May Consider Early Rate Hike Amidst Economic Growth and Inflation Concerns
Australia's economic landscape is witnessing a dynamic shift as the Reserve Bank of Australia (RBA) grapples with the implications of recent growth figures and inflationary pressures. The latest GDP ...Read more
Economy
Inflation concerns grow as consumer price index rises, prompting potential interest rate hikes
The latest Consumer Price Index (CPI) data has sparked fresh concerns about inflation in Australia, with experts suggesting that further interest rate hikes may be on the horizon. The CPI, a key ...Read more
Economy
Australia’s inflation surges amid Iran conflict, prompting potential RBA rate hike
Australia's economy is grappling with a significant surge in inflation, driven by the escalating conflict in Iran, which has sent energy prices soaring. The latest Consumer Price Index (CPI) figures ...Read more
Economy
Inflation surge prompts calls for RBA interest rate hike
In light of the latest Consumer Price Index (CPI) data, inflation in Australia has surged, sparking discussions among financial experts about the potential need for an interest rate hike by the ...Read more
Economy
State Street economist warns of potential rate hikes as labour market remains robust
In the wake of the latest Labour Force data release, financial experts are weighing in on the implications of Australia's persistently strong labour market. State Street, a global leader in financial ...Read more
Economy
Australia and Korea urged to deepen ties amid escalating fuel crisis
As tensions in the Middle East escalate, Australia and South Korea are being called upon to strengthen their existing trade and investment ties to navigate the ongoing global fuel crisisRead more
Economy
Inflation figures steady as labour market shows resilience
In a landscape marked by economic uncertainties, the latest inflation data has been met with cautious optimism by industry leaders. The inflation rate has edged down slightly to 3.7%, a development ...Read more
Economy
RBA cash rate decision sparks expert analysis on potential impacts
The Reserve Bank of Australia (RBA) has caught the attention of financial experts worldwide with its latest monetary policy decision, signalling potential shifts in the economic landscapeRead more
Economy
RBA May Consider Early Rate Hike Amidst Economic Growth and Inflation Concerns
Australia's economic landscape is witnessing a dynamic shift as the Reserve Bank of Australia (RBA) grapples with the implications of recent growth figures and inflationary pressures. The latest GDP ...Read more
Economy
Inflation concerns grow as consumer price index rises, prompting potential interest rate hikes
The latest Consumer Price Index (CPI) data has sparked fresh concerns about inflation in Australia, with experts suggesting that further interest rate hikes may be on the horizon. The CPI, a key ...Read more
