Around 85 per cent of experts and economists have forecast the global economy will not be fully recuperated for at least two years, according to a new survey.
The latest RBA Cash Rate Survey has showed all 43 Australian experts and economists it asked expects the Reserve Bank to hold the cash rate at 0.25 per cent at its meeting on Tuesday.
More than one-third of the experts (37 per cent or 14 of the 38 that weighed in) expect Australia to have its first quarter of GDP growth in the third quarter of the year.
AMP Capital chief economist Shane Oliver stated he does not anticipate the cash rate will start increasing again for three years at least.
“The cash rate is already at the RBA’s effective lower bound and governor Lowe has reiterated that negative interest rates are ‘extraordinarily unlikely’ so, rates won’t be cut,” Dr Oliver said.
“But with the economy taking a big hit from the coronavirus shutdown, economic activity has fallen well below potential and this will take a long time to fully reverse which means high unemployment and low inflation for several years to come so the RBA can’t raise rates.”
Mark Crosby, applied macroeconomist at Monash University, said Q3 GDP growth will be more about how bad the preceding quarters turn out.
“If growth in Q3 2020 was measured against any quarter in 2019 it would be negative,” Mr Crosby said.
“In other words, it’s growth but nowhere near a reversion towards trend in Q3, not the end of recession (other than in definition) and not the end of rising unemployment.”
Nearly half of the experts who were quizzed on the hospitality industry (47 per cent, or 15 out of 31) said they expect restaurants and bars will not operating at full capacity and without social distancing restrictions until 2021.
Less than a third (10 or 31 per cent) expect restaurants and bars to return to normal conditions this year.
Meanwhile more than two-thirds of the experts who weighed in on stamp duty (69 per cent or 24 out of 35) suspect the tax will be axed within the next 18 months, as the government looks to support the economy post-COVID-19, with most (21) expecting the change in 2021.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].