ECON7200 - Economic Principles - Unemployment Figures - Economics Assignment Help

Assignment Task :

Australia’s jobless rate is set to soar in the next three months to levels just shy of a recession-era peak in 1992 as the economy is set to contract severely, according to Bill Evans of Westpac Banking Corp. “Economic disruptions are set to be larger as the government moves to address the
enormous health challenge which the nation now faces,” the chief economist said in a research note Tuesday. “Despite releasing new forecasts only last week we are now revising those forecasts in light of the current extraordinary circumstances.” He had previously forecast a 7% peak. Evans expects 814,000 job losses in the second quarter will lift unemployment to 11.1% and the economy will contract 3.5% in the period. Australia’s gross domestic product rose 2.2%
in the final three months of 2019 from a year earlier -- the most recent data -- and the jobless rate fell to 5.1% in February. Australia is battening down the hatches to halt the spread of the coronavirus: the government shut the border to non-nationals and ordered non-essential services like pubs and gyms closed. It has rolled out two fiscal stimulus packages and the Reserve Bank cut its cash rate to 0.25% and initiated a yield target on government bonds to lower risk free rates across the economy.

Josh Williamson, a senior economist for Australia at Citigroup Inc., reckons about 440,000 people will have lost their jobs by the third quarter, with the unemployment rate peaking at 8.4%. Slower growth in the working age population sees a lower unemployment rate than would otherwise be the case, according to Williamson. Citi is forecasting second-quarter GDP to shrink by 5.7%, following a first-quarter decline of 1.2%. “The shock has come from households and governments deliberately limiting demand side economic behavior because of the threat of infection,” Williamson said. “Once this passes,
private sector activity should improve, particularly given the stimulus provided by the government, RBA and pent-up demand from consumers.” Westpac’s Evans said the recovery in the third quarter is set to be “slow” and sees the jobless rate remaining at 11% and GDP still shrinking

Task:

1. With reference to the article above, discuss in your own words how the GDP and unemployment figures are expected to change this year, compared to their values before the current coronavirus crisis.
2. Within your answer, make sure to focus on showing your understanding of what the GDP and unemployment figures mean, and that you reference key concepts and use the key terminology that we have studied in this topic.

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