The OECD has upgraded Australia’s economic growth outlook for 2020 in its latest Interim Economic Outlook Report despite the global economy being hit by “an unprecedented sudden shock in modern times” as a result of the coronavirus crisis.
According to the OECD, global GDP will contract by 4½ per cent in 2020 before picking up by 5 per cent in 2021, as the world deals with the economic fallout from the coronavirus. To put this in context, global growth fell just 0.1 per cent in 2009 during the Global Financial Crisis.
Economic growth in Australia is projected by the OECD to fall by 4.1 per cent in 2020, representing an improvement of 0.9 percentage points compared to the OECD Economic Outlook from June.
Australia’s economic outlook compares remarkably well to other nations with the United Kingdom forecast to contract 10.1 per cent, Italy 10.5 per cent, France 9.5 per cent, Canada 5.8 per cent and Germany 5.4 per cent.
The OECD also sends a warning that “localised lockdowns, border closures and new restrictions being imposed in some countries to tackle renewed virus outbreaks are likely to have contributed to the recent moderation of the recovery in some countries, such as Australia.”
Put simply closed borders cost jobs and put the economy in a weaker position to recover.
Only by working together will we beat this virus and ensure that our economy comes out stronger on the other side with the OECD calling on “enhanced global co-operation to maintain open borders and the free flow of trade, investment and medical equipment which is essential to mitigate and suppress the virus in all parts of the world and speed up the economic recovery.”
Australia approached this crisis from a position of economic strength. The Federal Budget returned to balance for the first time in 11 years which underpinned our capacity to respond to this unprecedented shock with more than $300 billion in economic support.
State Governments will also play an important role in the recovery with the RBA Governor proposing to National Cabinet that States Governments commit a further $40 billion in areas such as infrastructure over the next two years.
The Morrison Government will continue to do what is necessary to cushion the blow and help all Australians get to the other side of the crisis.