Economy to get boost from NSW reopening

Treasurer Josh Frydenberg says NSW exiting out of lockdown is significant for the national economy.
Treasurer Josh Frydenberg says NSW exiting out of lockdown is significant for the national economy.

Josh Frydenberg believes the end of the 100-day coronavirus lockdown in NSW is set to reignite the national economy, although there are mixed views how successful the recovery will be,

The federal treasurer says the economy has been hit hard by the Delta variant, with lockdowns in NSW and Victoria - the nation's two biggest economies - costing around $2 billion a week.

"But we also know from other experiences through this pandemic that the economy does bounce back," Mr Frydenberg told the Seven Network on Monday.

"Once obstructions are raised, businesses reopen and the kids get back to school and people get back to work, that's what we are hoping for, that's what we expect."

It comes as forecasts by Deloitte Access Economics showed the economy would grow to 4.5 per cent in 2022 after a 3.2 per cent expansion over 2021.

But Deloitte Access Economics partner and economist Chris Richardson says while he expects an excellent recovery over 2022, much will depend on vaccination rates.

"Forecasts for everything from wages to unemployment to hospitalisation and haircuts depend on vaccination," he said in his latest quarterly business outlook.

Even so, Mr Richardson believes a large lift in wages growth is still "miles off".

Shadow treasurer Jim Chalmers was unimpressed.

"After all Australians have sacrificed during this pandemic, their reward from Scott Morrison and Josh Frydenberg is slower wages growth for longer," Dr Chalmers told AAP.

A Westpac survey of 1000 small- to medium-sized business across Australia found that 85 per cent believe the economy will quickly return to growth as restrictions ease and 70 per cent expect increased sales in the next 12 months.

"Small businesses have been through an incredibly tough time and while challenges remain, it's extremely encouraging to see so many business leaders feeling optimistic about the future as Australia prepares to reopen and recover," Westpac chief executive consumer and business banking Chris de Bruin said.

However, a separate survey by accounting body CPA Australia was less optimistic, with just 32 per cent of the 144 accountants surveyed confident in the performance of the economy over the next three months, while 42 per cent were worried about the outlook.

"We think this reflects ongoing uncertainty about re-opening requirements and what they'll mean for businesses, their employees and customers, as well as how future outbreaks will be managed," CPA Australia chief executive Andrew Hunter said.

Mr Frydenberg said the economy will receive a further boost once other states ease their restrictions and international borders reopen to overseas visitors.

"If we can fast track and ensure home quarantine is effective and successful, then the international borders can reopen, I know prime minister Morrison is very keen to see that happen and we need to re-engage with the world," Mr Frydenberg said.

Australian Associated Press