SYDNEY- Australia’s economy will recover from its first recession in three decades faster than previously anticipated after containing the spread of COVID-19, the government projected on Thursday.
Updating the budget outlook, Treasurer Josh Frydenberg said the country’s A$2 trillion ($1.5 trillion) economy will grow 4.5 percent in 2021, up from a previous estimate of 4.25 percent made just two months before.
Unemployment, which effectively peaked above 10 percent, will recover to pre-COVID-19 levels of around 5.25 percent within four years, he said.
“Australia’s economic recovery from the COVID crisis is now expected to be faster than our recovery from previous recessions,” Frydenberg told reporters in Canberra.
The rosier economic projections come after Australia’s conservative government unleashed A$300 billion in emergency stimulus to support activity through a COVID lockdown.
Much of the fiscal spending came via the government’s wage subsidy program to counter rising unemployment.
With most states and territories removing most social distancing curbs, Australia’s annual budget deficit will be smaller than previous expected – though still at a record.
Frydenberg said Australia’s budget deficit in the year to June 2021 will total A$197.7 billion, down from the October projection of A$213.7 billion.
Adding to the tide of stimulus, the Reserve Bank of Australia (RBA) has slashed interest rates to near zero and launched a A$100 billion bond-buying program, saying creating jobs was a “national priority.”