Australia is expected to report its biggest budget deficit since World War Two on Thursday when Canberra reveals the full economic damage caused by the coronavirus pandemic and as the country struggles with its first recession in three decades.
Federation Square is seen devoid of people after Melbourne, Australia, returned to a stage-three lockdown as part of efforts to curb a resurgence of the coronavirus disease (COVID-19), July 23, 2020. REUTERS/Sandra SandersAustralian Treasurer Josh Frydenberg will deliver an economic update saying the fight against coronavirus has come at great expense, despite Australia reporting far fewer cases and deaths than many developed nations.
Frydenberg will report the country’s biggest budget deficit in more than 70 years, extracts of his announcement seen by Reuters show.
“You will see eye watering numbers around debt and deficit,” Frydenberg told Australia’s Channel 9 ahead of his speech.
“Coronavirus has required the government to spend unprecedented amounts of money to support people in need.”
Australia has recorded about 12,500 coronavirus cases with a death toll of 123, with many businesses forced to close or shut temporarily due to social distancing restrictions.
The government has pledged about A$290 billion in support to prop-up its virus-hit economy.
The exact size of the deficits for the financial years 2019/2020 and 2020/21 will be published later on Thursday.
Economists expect that for the year that ended on June 30, the budget deficit will top A$75 billion, or about 4% of Australia’s gross domestic product.
The 2020/21 deficit is tipped to be in excess of A$200 billion or about 10% of GDP.
The forecasts could also balloon further as authorities struggle to contain a fresh outbreak of COVID-19 in Australia’s second largest state.
Australia on Wednesday recorded its biggest one-day rise in new cases despite much of Victoria being ordered to stay home for the last two weeks.
Authorities in Australia’s most populous state, New South Wales are also on high alert for a wave of infections despite the border with Victoria being closed.