An economic advisor to Prime Minister Scott Morrison has made a very chilling prediction about the country’s economy claiming it won’t fully recover from the coronavirus pandemic until at least 2024.
Former Dow Chemical executive chairman Andrew Liveris based his forecast on the belief that the health crisis wouldn’t reach a low point until 2023.
His warning comes after the unemployment rate spiked to its highest level in nearly two decades at 7.1 per cent in May as a further 227,700 people lost their job.
Mr Liveris, who has advised both the Trump and Obama administrations on manufacturing policy, told the Australian Financial Review recurrences in COVID-19 infection would continue until there are mass doses of vaccine available.
Former Dow Chemical executive chairman Andrew Liveris (pictured) has warned Australia will not recover from the coronavirus pandemic until at least 2024
In an op-ed for the publication, Mr Liveris said the world is in a ‘crisis’ due to the greatest health threat since the Spanish Flu, the worst economic downturn since the Great Depression and the biggest social disruption to rock the US since the 1960s.
The series of events are all ‘connected’ and ‘amplifying’ each other as governments attempt to reopen their economies and as Black Lives Matter protests take to the streets.
Mr Liveris said the COVID-19 pandemic has changed how we work, accelerated the reliance on digital interactions and commerce and put travel on hold.
May’s monthly drop in the number of people employed is the second largest on record, after nearly 600,000 were sacked in April, figures released by the Australian Bureau of Statistics show.
Treasury expects the unemployment rate could hit eight per cent by September.
Market economists think it could go even higher, particularly as support measures during the crisis, like the JobKeeper wage subsidy, are wound back.
Mr Liveris believes governments will need to invest in infrastructure to address social inequalities.
‘I think capitalism and democracy are going to have a sort of divorce after what has been a very market-defined marriage,’ he wrote.
‘They [governments] must underwrite strong, accessible health and education systems. They must act to manage outcomes for the wider community, to give citizens a fair share of what can be a highly prosperous period.’
Pictured: A restaurant in Newtown, Sydney, displays a closed sign due to coronavirus lockdown restrictions
Mr Liveris wrote that he has been encouraged by the COVID-19 pandemic as community members have been able to unite through the health crisis.
The special advisor to the National COVID-19 Coordination Commission also told the publication he is concerned about debt levels as governments desperately try to pull themselves out of coronavirus lockdown and reopen their economies.
He said monetary policy had been the drug of choice for Western economies since the 1980s.
‘As we pile up more and more debt, it’s not yet clear where the new growth and where the financing of that growth is going to come from,’ Mr Liveris said.
Pictured: People line up outside a Centrelink office in Adelaide during the coronavirus pandemic
The governor of the Reserve Bank says he’s confident about the Australian economy bouncing back but says policy reform by government will be a key factor.
Governor Philip Lowe says the economy is benefiting from the way the government has responded to the pandemic, and the outlook has improved.
The COVID-19 pandemic has been much milder in Australia with only 102 people dying from the disease, compared to thousands, or tens of thousands in some other countries.
This has allowed state governments to lift many restrictions after three months, helping the economy to get back on track.
‘Three or four months ago I thought hours worked in Australia could fall close to 20 per cent, I think the number now is more like 10 per cent, so it’s not nearly as bad as anticipated,’ Dr Lowe told the ANU Leadership forum in Canberra.
He said there will be a shadow over the economy that might last for years, with consumer confidence and business confidence slow to return unless regulation reforms are undertaken.