Experts have warned Sydney’s extended lockdown could be a catalyst for another recession in Australia.
In Finder’s latest RBA Cash Rate Survey, 40 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy, with all panellists expecting a rate hold for this month.
With Greater Sydney set to be in lockdown until at least the end of August, 63 per cent of experts (19/30) believed that the lockdowns could see Australia enter another recession.
Nearly two in five (38 per cent) thought it could take as little as another two months in lockdown for the recession to hit.
Finder head of consumer research, Graham Cooke suggested all eyes will be on the length of Sydney’s lockdown.
“Economists fear that a prolonged lockdown could push us into recession, and the extension of the measures in Sydney will get us a third of the way there,” Mr Cooke said.
Close to half of the respondents (43 per cent) thought that Australia’s response to the pandemic has hurt its international reputation.
Uncertainty returns for employment and wage growth
While positivity towards both wage growth and employment surged in July, August’s predictions saw both of these economic indicators dip significantly.
The tracker is based on the expert’s sentiments on housing affordability, employment, wage growth, cost of living and household debt over the next six months.
Mr Cooke said it was no surprise that the latest COVID-19 developments had driven sentiment into the ground.
“Last month, we saw positivity towards wage growth spike to its highest point since our survey began. While this has seen a sharp decrease, it’s employment that’s seen the biggest dip, dropping from 71 per cent in July to 29 per cent for August,” Mr Cooke said.
“Positive economic sentiment overall has dropped to 14 per cent in August, down from 28 per cent last month.”
Lockdowns could see household debt increase
Half of the experts (52 per cent) believe that household debts will increase due to the recent lockdowns across the country.
Lateral Economics CEO, Nicholas Gruen said it depended on whether Australians received the same support they did last year.
Money Magazine managing editor, Julia Newbould said the lockdowns could increase debt marginally, if people are unable to work and pay their bills.
“It will, however, stop some discretionary spending,” Ms Newbould said.
Metropole Property Strategists founder, Michael Yardney said that without the support of JobKeeper, more Australians are going to find themselves out of work while others will be working fewer hours.
Almost two-thirds of experts (63 per cent) don’t think another round of JobKeeper payments will be announced to counteract the most recent lockdowns.
