Melbourne stage 4 restrictions to cost up to $9bn and raise unemployment to 10%

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PM Scott Morrison announced today that the Treasury estimates of the impact of the Victorian stage four lockdown to the national economy will cost around $9 billion.

“The additional restrictions in Victoria in August and September is estimated to reduce the size of the real economy, real GDP in the September quarter by between $7 billion and $9 billion,” said PM Morrison.

“This is a heavy blow, a heavy blow: 80% of this economic cost is expected to be in the affected areas of Victoria, of around $6 billion to $7 billion in that state.”

“The remainder represents a preliminary estimate, and I underline that, of the broader impact of confidence in other states and supply chain impacts from the shutdown of certain industries in Victoria.”

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“The combined effect of GDP – on GDP of the stage 3 and 4 Victorian restrictions through the September quarter is expected to be in the order of $10 billion to $12 billion detracting some 2.5% from quarterly real GDP growth.”

“National unemployment rate is now expected to seed the forecast peak of 9.25% and may instead peak closer to 10% which I note is in line with what the governor of the Reserve Bank [predicted].”

“But of greater concern, as I have said to you before is the effective unemployment rate.”

“We know the measured headline of unemployment rate does not tell the full story of what’s happening with people’s jobs and I have been very candid with people about that.”

“And it is estimated the increase in effective unemployment to be between 250,000 and 400,000. Now, that isn’t necessarily people who have lost their employment but it also includes those whose employment has been reduced to zero hours. But as I said, the effective unemployment rate is the one we’re watching.”

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