Australia: The worst annual contraction in history – Standard Chartered

Economists at Standard Chartered Bank have lowered the Australian 2020 growth forecast to -5.1% y/y, the worst annual contraction in Australia’s history. AUD/USD is sitting at 0.6521. 

Key quotes

“We lower our 2020 growth forecast for Australia to -5.1% y/y (-0.8% y/y previously). This would be the worst contraction since at least 1960 when the current GDP series was first published.” 

“We expect GDP to contract over 12% y/y in Q2. We also lower our 2020 inflation forecast to 0.7% y/y (from 1.8% y/y) to account for slower activity and lower global crude oil prices.” 

“Government spending aimed at enabling businesses to retain workers should prevent a rapid rise in unemployment; nevertheless, we expect the unemployment rate to peak at c.11%.”