Australian economy will take biggest dive since the 1930s, the IMF says 

The ‘Great Lockdown’ will make Australia’s economy shrink by 6.7 per cent this year in the worst recession since the 1930s, the IMF says

• Australian economy to experience sharpest downturn since 1930s, IMF warned
• The national reduction in economic growth forecast to be 6.7 per cent in 2020
• Such a reduction would also result in deepest recession since Great Depression
• Australia is forecast to be one of the Asian region’s worst-affected countries 
• Globally, the IMF is forecasting dramatic economic slowdown of three per cent 
• Learn more about how to help people impacted by COVID

By Charlie Coë For Daily Mail Australia and Associated Press

Published: 17:54 BST, 14 April 2020 | Updated: 22:13 BST, 14 April 2020

The Australian economy will experience its sharpest downturn since the 1930s this year, the International Monetary Fund has warned.

The global lender said the economy would shrink by 6.7 per cent in 2020 amid the coronavirus pandemic – the largest contraction since the Great Depression.

Such a reduction in economic growth would also result in the deepest recession since World War Two.

A busker plays in a near empty Rundle Mall in Adelaide on April 6. The Australian economy is forecast by the IMF to experience its sharpest downturn since the 1930s

But growth rate of 6.1 per cent is forecast for 2021.

Australia is likely to be one of the Asian region’s worst-affected countries, the IMF said, and is expected to suffer a steeper downturn than the UK, Canada, Japan and China.

Germany, France and Italy are forecast to have sharper economic falls. 

Unemployment in Australia will also reach a rate of 7.6 per cent over the course of 2020, before increasing to 8.9 per cent in 2021, the IMF said.  

It comes as new Treasury figures predict unemployment in the June quarter will double from 5.1 per cent to 10 per cent. 

Globally, the IMF – which lends money to countries as a last resort – is forecasting an economic slowdown of three per cent.

Shoppers wait to enter a Coles supermarket in Adelaide last week. Unemployment levels are predicted by the leading international financial body to hit 7.6 per cent

Pictured: A man in front of Australian Stock Exchange Market boards on March 9 as the coronavirus crisis escalated

More advanced economies will likely drop the most, with an average 6.1 per cent fall predicted. 

The assessment represents a stark downgrade by the IMF.

CORONAVIRUS CASES IN AUSTRALIA: 6,415

New South Wales: 2,870

Victoria: 1,291

Queensland: 998

South Australia: 433

Western Australia: 527

Australian Capital Territory: 103

Tasmania: 165

Northern Territory: 28

TOTAL CASES:  6,415

RECOVERED: 3,603

DEAD: 62

In its previous forecast in January, before COVID-19 emerged as a grave threat to public health and economic growth worldwide, the international lending organization had forecast moderate global growth of 3.3 per cent this year.

But far-reaching measures to contain the pandemic – lockdowns, business shutdowns, social distancing and travel restrictions – have suddenly brought economic activity to a near-standstill across much of the world.

‘The world has been put in a great lockdown,’ the IMF’s chief economist Gita Gopinath told reporters. 

‘This is a crisis like no other.’

Ms Gopinath said the cumulative loss to the global gross domestic product, the broadest gauge of economic output, could amount to $9trillion – more than the economies of Germany and Japan combined.

The IMF said Tuesday it expects the global economy to shrink 3 per cent this year – far worse than its 0.1 per cent dip in the Great Recession year of 2009 – before rebounding in 2021 with 5.8 per cent growth.

It acknowledges, though, that prospects for a rebound next year are clouded by uncertainty. 

 

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