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  • Sun. Jul 7th, 2024

Quick bounce back unlikely for Australian economy post-coronavirus despite political optimism

Quick bounce back unlikely for Australian economy post-coronavirus despite political optimism

When will the penny drop? Better still, make that a dollar.

It’s now becoming clear that even if we do get back to some semblance of normality, whatever that may be, it will be a much longer climb back than our leaders are willing to concede.

Hope springs eternal in the halls of power and, in times of great uncertainty such as these, it’s about all we can cling to.

On Friday, the Reserve Bank forecast unemployment would hit 10 per cent this year and remain high until the end of next year.

Despite this, it was forecasting what is known in the game as a V-shaped recovery, where, once we are through the health crisis, the economy will quickly rebound back to where it was.

Prime Minister Scott Morrison and Treasury are even more optimistic, forecasting a “snap back” with 800,000 jobs returning in no time at all. And they are not alone.

A few hours before the RBA released its projections, the Bank of England was doing the same. The situation was dire but the outlook positive. The recovery certainly would be a V for victory.

The UK was facing the worst economic downturn in 300 years, it announced, but the bounce would be equally as speedy as the decline.

Despite the chutzpah, stunned economists were quick to shoot down the rosy projections.

The International Monetary Fund similarly loudly has embraced the V. But as the damage bill continually rises, that V has started to look more like a U or, even more worryi

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