Experts warn extended Sydney lockdown could lead to another recession: Finder

The extended lockdown across greater Sydney could be the catalyst for another Australian recession, according to experts surveyed in this month’s Finder RBA Cash Rate Survey. 

All 40 experts and economists that weigh in on future cash rate moves and other issues relating to the state of the economy, expect a rate hold for this month.

With greater Sydney set to be in lockdown until at least the end of August, the majority of experts who weighed in* (63%, 19/30) believe that the lockdowns could see Australia enter another recession. 

Nearly 2 in 5 (38%, 8/21) of economists think that it could take as little as another two months in lockdown for the recession to hit. 

Graham Cooke, head of consumer research at Finder, said all eyes will be on the length of Sydney’s lockdown.

Close to half of respondents who responded (43%, 12) think that Australia’s response to the pandemic has hurt its international reputation. 

Uncertainty returns for employment and wage growth 

While positivity towards both wage growth and employment surged in July, August saw both of these economic indicators dip significantly. 

Cooke said it was no surprise that the latest Covid developments had driven sentiment into the ground. 

“Last month, we saw positivity towards wage growth spike to its highest point since our survey began. While this has seen a sharp decrease, it’s employment that’s seen the biggest dip, dropping from 71% in July to 29% in August."

“Positive economic sentiment overall has dropped to 14% in August, down from 28% last month,” Cooke added.