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How much is Sydney’s lockdown tipped to cost the economy?
Sydney’s snap two-week lockdown is set to cost the state billions of dollars, an economist has predicted.
How much is Sydney’s lockdown tipped to cost the economy?
Sydney’s snap two-week lockdown is set to cost the state billions of dollars, an economist has predicted.
In his latest weekly economic and market update, AMP Capital’s Dr Shane Oliver has opined that the two-week stay-at-home order will cost the city approximately $2 billion in lost economic activity.
Superseding previous restriction orders in an emergency press conference over the weekend, NSW Premier Gladys Berejiklian announced a two-week lockdown for Greater Sydney, the Central Coast, Blue Mountains and Wollongong that came into effect from 6pm on Saturday, 26 June, until midnight on Friday, 9 July.
According to the state's Premier, the restrictions or lockdown means there are only four reasons residents can leave their home including shopping for food or other essential goods and services; medical care or compassionate needs, including getting vaccinated; exercise outdoors, in groups less than 10; and essential work or education, where they cannot work or study at home.
Dr Oliver said that due to the large area that these new restrictions cover, it is likely to have a larger impact on Australia’s economic activity.
“With Greater Sydney, the Blue Mountains, Wollongong and the Central Coast having around 6.6 million people and covering about 25 per cent of Australian GDP, we estimate a hit to economic activity from the lockdown of about $2 billion if it’s contained to two weeks, with much of that likely to be recouped upon reopening,” Dr Oliver continued.
However, it is not a doom-and-gloom prediction for small businesses, with consumer spending likely to lift the week after lockdowns.
In fact, the weekly Australian Economic Activity Tracker shows a rising trend in economic activity through the period of snap lockdowns since last November, including a rebound recently after Victoria’s snap lockdown ended.
“Providing they are short, then the economic impact is relatively ‘minor’ (although still horrible for those impacted) as people and businesses delay spending and economic activity which then bounces back quickly once the lockdown ends,” he wrote.
The restrictions come just a week after retail sales underperformed.
AMP’s report showed that Australian retail sales rose a less than expected 0.1 per cent in May and the composite business conditions PMI fell 1.9 points in June.
“However, both were likely affected by the latest coronavirus scares. Retail sales saw the sharpest fall in lockdown-affected Victoria, but note that it’s still 8 per cent above its pre-coronavirus trend and likely to suffer going forward as spending on services recovers,” Dr Oliver concluded.
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