Australia: JobKeeper Payment has been a game changer – Westpac

With the announcement of the Australian Government’s latest JobKeeper Payment (JKP) policy and further tightening of social distancing guidelines Westpac Institutional Bank have reviewed our employment, GDP, and Budget deficit forecasts.

Key quotes

“We expect GDP will now contract by 8.5% in the June quarter; to be followed by a 0.6% contraction in the September quarter; and a 5.2% lift in the December quarter. Overall, the economy is expected to contract by 5% through the 2020 year.”

“Compared to the peak forecast rate of 17% unemployment in June without the JKP we expect the rate will peak at 9% in June and subsequently fall to around 7% by end December.”

“If the increased deficit is fully funded by bond issuance, the bond supply is expected to lift by an additional $310bn compared to the $250bn we estimated prior to the JKP.”