Finder’s RBA Survey: 73% of experts say Sydney’s lockdown will wipe $2bn or more off Australia’s GDP
54% of experts think lockdown will continue past Friday
70% of economists say tax returns should be used to pay off debt
One-third of experts are expecting the cash rate to rise in 2022
6 July 2021, Sydney, Australia – The latest round of lockdowns is set to cost an eye-watering amount to Australia’s economy, according to experts.
In this month’s Finder RBA Cash Rate Survey™, 40 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy, with all panelists expecting a rate hold for this month.
With almost half of the country in lockdown, just over half of the experts who weighed in on the question* (55%, 6/11) agree with reports that the current lockdown across Sydney alone will wipe $2 billion off Australia’s overall GDP, with a further 18% (2/11) believing that it will wipe even more.
Graham Cooke, head of consumer research at Finder, said it was no surprise that the latest wave of COVID cases could put a serious downer on economic sentiment.
“Positivity towards wage growth and employment are both surging, with wage growth sentiment currently at the highest point since our survey began 38 months ago.
“If the current lockdown in Sydney runs for the expected 14 days, it is unlikely to have much of a dampening effect on these figures.
“If, however, the outbreak is not contained and the lockdown continues for further weeks, we could very well see uncertainty return on these metrics,” he said.
54% expect NSW lockdown to continue
While the current lockdown across greater Sydney has been implemented for 14 days, 54% (7/13) of economists think this won’t be enough.
Cooke said with lockdowns now following the spread of COVID cases around the country, it’s looking increasingly unlikely that we’ll see the lockdown in NSW finish as scheduled.
“While the economy has held up well against external factors so far, keeping a lid on cases and the lockdown as short as possible is more important than ever.”
Looking beyond lockdown at international travel, just over half (53%, 17/32) of respondents believe it will be allowed for vaccinated Australians before mid-2022.
Only 9% (3/32) think that international travel won’t be allowed before 2023.
Agreement on how Australians should spend their tax return
The majority of experts (21, 70%) think it’s a good idea to encourage Australian’s to spend their tax refunds on their debts.
Data from Finder’s Consumer Sentiment Tracker shows the average amount owed in credit card debt alone per cardholder is over $5,000.
Cooke said encouraging Australians to think wisely about how they use their cash injection was a good idea.
“The pandemic has shown us what an unforeseen financial event can look like, so for many Australians minimising debt and having some emergency cash is top of mind.”
Peter Boehm of CLSA Premium said levels of household debt were too high.
“Once interest rates start to rise, so too will loan repayments and the overall debt burden. Paying off debt as soon as possible can save thousands of dollars in interest and help strengthen household financial wellbeing,” Boehm said.
Brodie Haupt of WLTH also said it was important to encourage Australians to decrease their debt.
“However as we have seen over the last year, it is now more important than ever to have a safety fund in place, so I wouldn’t recommend using the whole refund to pay down debts.”
1 in 3 economists expect a cash rate rise in 2022
All 40 participants that took part in Finder’s RBA Cash Rate survey correctly predicted that the cash rate would remain on hold today.
While only 5% (2/40) of economists believe that the cash rate will increase before the year ends, 1 in 3 (13/40) expect an increase to occur in 2022. There is no expectation from the experts that the cash rate will decrease any time before 2023. *An addendum was added to the survey after the lockdown was announced