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Queensland Economic Advocacy Solutions

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QEAS Business Briefing - Australian Government's Economic and Fiscal Update - July 2020

The COVID-19 pandemic has been described as a once-in-a-century shock - placing immense pressure on Australia’s health system and economy. The outbreak of COVID-19 globally, the resulting containment measures in Australia during April and May, and now the second wave re-emerging in the southern States are having profound impacts on Australia’s economy.
 
The Government has provided support to the tune of $289 billion, equivalent to around 14.6 per cent of GDP. This action, together with large declines in taxation receipts and increases in payments, has seen a major deterioration in the Australian Government's budget position.

 
The economic and fiscal outlook remains highly uncertain and is almost impossible to predict. Controlling the spread of the virus remains a key challenge with COVID-19 infections continuing to rise - the community transmission that is now occurring in Victoria and NSW will inevitably set our recovery back. 
 
Providing economic forecasts in this environment has been likened to “wetting your finger and sticking it in the air to see which way the wind is blowing …. during a cyclone!”
 
This has been my prevailing view and hence my reluctance to provide any definitive comment to the media.  What is clear is that any economic recovery at present in Australia is a subset of our response to the COVID-19 health crisis itself. 

For a sustainable economic recovery, one of two things will inevitably have to occur: either a vaccine is found or Australia becomes so concerned with the economic fall-out that we consciously and permanently ease restrictions regardless of its implications on containing the virus. 
I certainly hope it is the first outcome not the second.

 

The Australian Government will provide further forecasts and projections over the forward estimates and medium term in the 2020-21 Budget, to be delivered on 6 October 2020. For the full QEAS business briefing click here.

 

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