Australia: Economy to stall in second half on covid outbreak – HSBC

“Australia’s economy is set to stagnate in the second half of the year amid the rapid of highly contagious Delta covid strain and the extended lockdowns in the country’s two of the most populous states,” Paul Bloxham, HSBC Chief Economist for Australia said in his latest research note.

Key quotes

“Even before the Sydney outbreak we had expected Australia’s growth to slow from its recent rapid growth rates, as population growth has stalled due to the closed border and as the fiscal impulse fades.” 

“Expect gross domestic product will drop 0.3% in the current quarter and rise 0.3% in the final three months.”

“The economy will then bounce back next year, though “the other headwinds to growth in 2022, including the only slowly re-opening border and tensions with China, are expected to remain.”

“The sharper-than-expected slowdown in growth, as a result of the Greater Sydney outbreak, raises the risk that the RBA decides not to taper after all.”