Recovering from the Economic Consequences of COVID-19 – Macroeconomic Considerations

17 August 2020

The Treasurer’s economic statement of 23 July 2020 highlighted the extreme uncertainty surrounding the macroeconomic outlook globally and nationally, with the course of the economy being profoundly influenced by the course the COVID-19 pandemic might take. Yet we know we are experiencing the deepest national and global recession since the Great Depression.

Will it be a V-shaped recovery, or U-shaped, L-shaped or possibly W-shaped involving a double dip? As recovery begins, more of those workers who gave up searching for jobs when the COVID-19 lockdowns began will be encouraged to re-enter the labour market, adding to the pool of unemployed. When might unemployment peak?

Australia’s services exports, including inbound university students and tourists and professional services exports such as engineering services, will be hostage to ongoing international travel restrictions. What effect will those restrictions have on national prosperity?