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400,000 more jobless expected as Vic lockdown bites

National

Another 400,000 people are expected to lose their jobs as a result of Victoria’s virus lockdowns, pushing the national unemployment rate up to 10 per cent.

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Treasury also expects economic growth will be slashed by $12 billion in the September quarter.

“This is a heavy blow – a heavy blow,” Prime Minister Scott Morrison told reporters on Thursday.

Just more than two weeks ago, Treasury forecast the jobless rate to peak at 9.25 per cent but Victoria has since ramped up restrictions to stop the spread of coronavirus.

Morrison said the unemployment rate did not give the full story.

He prefers to use the effective unemployment rate, which includes people who have lost their jobs, as well as people who are still in work but have had their hours reduced to zero.

“This effective rate of unemployment, which had fallen in the most recent numbers down to just over 11 per cent, heads north again back to where it had come down from, which is in the high 13s,” he said.

“So, that is very concerning. That is very troubling but it is not unexpected.”

Morrison hinted further stimulus to economy could be forthcoming before the October 6 budget.

“The treasurer and I are consider some further issues around JobKeeper as I said we would be,” he said.

“We are making announcements constantly. The budget will be in October and that will be another significant, arguably the most significant instalment in these announcements.”

Deputy Prime Minister Michael McCormack has not ruled out providing further assistance to the crippled aviation sector.

“We will continue to look at what is necessary at the time,” he told Sky News.

“That’s what we have done right the way through since February-March. We have made sure the assistance is available, not just for the airline industry but for the economy, and we will continue to do that.”

The Reserve Bank will release its quarterly statement on monetary policy on Friday, which will contain the central bank’s latest economic forecasts.

Reserve Bank governor Philip Lowe gave a flavour of what to expect in his post-monthly board meeting statement on Tuesday after leaving the cash rate at a record-low 0.25 per cent.

The central bank’s baseline case is that growth will drop six per cent this year as the economy suffers its first recession in nearly 30 years before rebounding by five per cent the following year.

This will see unemployment rise to about 10 per cent by year’s end as a result of the Victorian lockdown.

During the next couple of years, the jobless rate is expected to decline gradually to about seven per cent.

-AAP

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