Invest
Experts predict economy won’t recover until 2022
Around 85 per cent of experts and economists do not believe the economic recovery will be V shaped, with it taking at least two years to fully recuperate losses, a survey has revealed.
Experts predict economy won’t recover until 2022
The latest RBA Cash Rate Survey has showed all 43 Australian experts and economists expects the Reserve Bank to hold the cash rate at 0.25 per cent at its meeting on Tuesday.
While most are predicting that the economy will slowly recover, most experts believe that interest rates will remain on hold this afternoon.
AMP Capital chief economist Shane Oliver stated the RBA has likely reached its floor and does not predict a move up for at least three years.
“The cash rate is already at the RBA’s effective lower bound and governor Lowe has reiterated that negative interest rates are ‘extraordinarily unlikely’ so, rates won’t be cut,” Dr Oliver said.
“But with the economy taking a big hit from the coronavirus shutdown, economic activity has fallen well below potential and this will take a long time to fully reverse which means high unemployment and low inflation for several years to come so the RBA can’t raise rates.”
However, it is not all bad news for the Australian economy with more than one-third of the experts (37 per cent or 14 of the 38 that weighed in) expect Australia to have its first quarter of GDP growth in the third quarter of the year.
Mark Crosby, applied macroeconomist at Monash University, said Q3 GDP growth will be more about how bad the preceding quarters turn out.
“If growth in Q3 2020 was measured against any quarter in 2019 it would be negative,” Mr Crosby said.
“In other words, it’s growth but nowhere near a reversion towards trend in Q3, not the end of recession (other than in definition) and not the end of rising unemployment.”
Nearly half of the experts who were quizzed on the hospitality industry (47 per cent, or 15 out of 31) said they expect restaurants and bars will not operating at full capacity and without social distancing restrictions until 2021.
Less than a third (10 or 31 per cent) expect restaurants and bars to return to normal conditions this year.
Meanwhile more than two-thirds of the experts who weighed in on stamp duty (69 per cent or 24 out of 35) suspect the tax will be axed within the next 18 months, as the government looks to support the economy post-COVID-19, with most (21) expecting the change in 2021.
RELATED ARTICLES
About the author
About the author
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more
Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more
Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more
Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more
Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more
Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more
Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more
