The impacts of COVID-19 are quickly being felt by the Australian economy. Unemployment is expected to peak at 17.1% alongside a GDP contraction of 8.5% in the June quarter. The Australian government is likely to issue an additional $250 bn in government debt over the coming year to support the expansive economic policies being rolled out. Conditions in the global economy are predicted to remain weak, with the IMF expecting Global GDP to decline by 3%.
With austere shutdown and social distancing polices being enforced, many industries are likely to experience a significant fall in output. The most seriously affected industries include retail, accommodation, restaurants, transport, reaction and real estate. Other industries also likely to be affected include manufacturing, construction. These are labour intensive industries. However, industries such as health, government and telecommunications will see a lift in employment and output. Overall, the economy is expected to contract by 5% in 2020 with unemployment peaking at 17% in the June quarter before improving to 9% by the end of 2020. This is still an unprecedented high.
The Government's latest announcement of the $130 bn JobKeeper Payment policy has been a game changer for employment, expediting a revision of recent unemployment forecasts. The JobSeeker Payment aims to keep workers from being retrenched by subsidising eligible employers with $1500 per fortnight to supplement their employee's wages. The policy extends to sole traders and small companies and is also available to workers who have been stood down since March 1. With almost 40% of businesses being able to qualify for the payments, employers will be able to retain most of their workers. The impact of the JobKeeper will lower the forecast unemployment peak from 17% to only 9%.