Financial advisory firm KPMG has warned that the lockdown in the Sydney northern beaches suburb of Avalon could cost $3.2 billion due to the loss of working hours in December.
This is despite the New South Wales (NSW) state government taking a more restrained approach to CCP (Chinese Communist Party) virus (novel coronavirus) restrictions than in its neighbouring state, Victoria.
KPMG chief economist Brendan Rynne told News Corp’s The Australian on Sunday that while the NSW government was doing an excellent job in containing the outbreak, he believed the lockdowns adversely affected the economy regardless.
“Unfortunately, that pressure brings with it an economic cost as it directly and quickly hits the supply side, and the longer it goes on, it then transfers to demand via confidence,” Rynne said.
KPMG based its analysis on estimating how the lockdown would affect the number of hours worked and how Australia’s Gross Domestic Product (GDP) would be influenced by the increase in restrictions, including social distancing and reimposed domestic border controls.
Rynne estimated that the Avalon outbreak and subsequent preventive measures meant 34 million fewer hours were worked in December than the average. This indicated the real GDP had fallen by $3.2 billion.
Rynne also noted that the effects on the economy from the lockdown would reach into January, he estimated.
According to figures released in December by the Australian Bureau of Statistics, the Australian economy rose 3.3 percent during the September quarter. The increase came after a significant loss in the June quarter which saw the GDP fall 6.4 percent.
When asked about the Avalon lockdown, federal Treasurer Josh Frydenberg said on Dec. 18 that Australians need to think about the economic impact that closures and lockdowns have on the economy and people lives.
Frydenberg said that the Australian economy had seen real momentum with 90,000 new jobs being created during November 2020. He noted that 84,000 of them were full-time employment.
“We’ve seen two million fewer Australian workers on JobKeeper in October compared to the month prior in September,” Frydenberg said.
But he said that while the data showed positive signs, the road to economic recovery would be challenging.
“All of that data is very positive, but the future is challenging, and we know that next year will be another hard year and the road to recovery is going to be long and pretty bumpy as well,” he said.
New South Wales and Victoria are currently experiencing outbreaks of COVID-19, the disease caused by the CCP virus. This has caused the states to close their borders and forced Victorians returning home from Christmas holidays to apply for a permit to return home.