Economists reckon Australia's recovery will be a quick one

It’s anyone’s guess when the coronavirus will end, but when it does economists think Australia will bounce back fast.

CommSec’s Craig James said today underestimating the resilience of the economy was one thing no Australian should do.

“Australia hasn’t had a recession in 28 years, despite all manner of shocks, including the global financial crisis,” he said. “And while it will be difficult to avoid a downturn this time, our economy should also bounce back quickly.”

One sign James pointed to was today’s unemployment figures, which actually fell in February by double the number it increased in January.

While he admitted this data was ancient history, well before the effect of the coronavirus, he noted this did take into account the effect of the summer’s bushfires.

James admitted the outlook was tough and said the Morrison government’s next support package would be “super important”.

With respect to what exactly unemployment might rise to, he said it was worthless to predict and it would depend on government support for businesses and how fast vaccines and treatments were developed.

Recession is inevitable

Talking about a recovery implies that economists have conceded Australia will fall into recession if it is not already there.

Deutsche Bank pointed out that although supermarkets would be benefiting from the toilet paper and hand sanitiser boom, for every $1 spent on those items, there is $15 usually spent on things vulnerable to social distancing.

While CommSec has held off making an unemployment prediction, ANZ and AMP both have. The firms adopted a base case of 7.5 per cent unemployment when the crisis peaks.

However, they think the government and the Reserve Bank measures should prevent unemployment from rising much further than that.