Australian economic growth is likely to have declined 7 percent quarter-on-quarter in the second quarter, according to an ANZ research report.
The data for the second quarter will indicate the effect of the first wave of COVID-19 and the associated effect on the economy. It will also help to inform the view of the likely shape and timing of the recovery and hence of the task ahead, said ANZ.
As has been the case for much of the data over the past few months, there is more than the usual level of uncertainty around these forecasts given a range of large countering factors, not least the government’s stimulus packages.
“Our forecast is broadly consistent with the RBA’s. In the August Statement on Monetary Policy, the Bank was forecasting a 6 percent y/y decline in GDP. It is also consistent with the Government’s forecast of −0.25 percent for the fiscal year 2019-20”, said ANZ.
Most of the focus has now turned to the September quarter, where the second wave of the virus in Melbourne and the resulting lockdown will be a drag on the national recovery. At this stage, the national economy is expected to expand modestly, with the re-opening of businesses in other states countering a further contraction in activity in Victoria.
“The December quarter will prove challenging with a sharp drop off in fiscal stimulus currently scheduled to occur. We expect though that the Government will be keen to avoid a negative quarter, and anticipate a boost in stimulus measures in the October Budget that will help to support growth in both Q4 and over the more medium term horizon”, added ANZ.
