Some best-guess COVID-19 impacted forecasts

Now that things on the COVID-19 front appear to have settled down a little, policy initiatives are clearer, and it is looking more and more unlikely that we are going to see significantly more restrictive lock-downs we feel able to take some educated guesses about what the economic fall-out might be.

We have developed a model based on an industry sector analysis of the national, state and regional economies and labour markets and applied some assumptions about the impact of the existing restrictions and policy initiatives on those sectors in the period from March to the end of June.

We have considered the impact on employment levels (assuming participation rates remain unchanged) and on the pace of economic growth for Australia, Queensland and the Local Government Areas of Cairns Regional Council, Townsville City Council, City of Gold Coast and Sunshine Coast Council.

Today the Treasury released modelling which suggests that the unemployment rate in Australia will get as high as 10% by the end of June (see here). The Treasury forecast may well incorporate a decline in participation which would lessen the effect of employment loss on the unemployment rate and, as such, would be broadly in line with our own forecast of 13.2% (assuming no participation change). Our model is forecasting the national unemployment rate to lift to 5.5% in March and Queensland to go to 6.1% (data to be released on Thursday).

In Queensland we see unemployment reaching 14.0% by June with the Gold Coast being particularly badly impacted (hitting 16.6%) with employment down by more than 38,000. Cairns also is likely to do badly, getting as high as 15.5%, which is a sharp turn-around from the low of 4.7% seen at the end of 2019, with more than 10,000 jobs lost. While job losses in Townsville might be more moderate (down a little over 7,000) the fact that the city ended 2019 with an unemployment rate above 8% still sees them reaching 15.4% by June.

The slowdown in the second quarter is liklely to be severe, although again Cairns and the Gold Coast are especially badly impacted. Cairns economy for the 2019/20 Financial Year is forecast to shrink by 2.8%, far worse than the national average (-1.3%) or Queensland (-1.4%).

Leave a Response

  • © Conus Business Consultancy Services 2024

    Website created by RJ New Designs