VIEW: ANZ "now expect GDP to decline......>

AUSTRALIA: VIEW: ANZ "now expect GDP to decline 2.0% in '20 (prev. -4.7%) before

rising 1.8% in '21. The shutdown response to COVID-19 was not as extensive as we

exp., the health outcomes have been much better than feared, and the fiscal

response has been material. We continue to exp. the recovery, post a sharp

bounce in Q3, to be relatively slow & grinding, with both GDP & employment not

exp. to return to pre-pandemic levels until early '22. Even factoring in some

extension of the current fiscal stimulus past Sep, we expect that GDP will

decline in Q4, as the level of support for the economy is cut back. We have

factored in some additional stimulus, but to avoid a negative quarter, stimulus

will need to taper off more gradually than we are currently assuming. The

unemployment rate is forecast to remain in the high-6s until well into '21. Like

GDP, employment is not likely to reach pre-pandemic levels until early '22.

There is little doubt that fiscal policy will need to play a much larger role

over the next few years, and we exp. further announcements of targeted support

packages over coming months. If the economy disappoints next year & the labour

mkt doesn't improve, then the RBA would need to consider further measures."