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Warning coronavirus second wave would derail economy

Published: (Updated: ) in Australian News by .

A second wave of coronavirus in Australia would come at a $25 billion cost to the economy, the Organisation for Economic Co-operation and Development (OECD) warns.

A second wave of coronavirus in Australia would come at a $25 billion cost to the economy, the Organisation for Economic Co-operation and Development (OECD) warns.

It forecasts the Australian economy to contract by 5 per cent this year, but another hit of the virus in the December quarter could see that rise to 6.3 per cent.

The economy would then grow by just one per cent next year.

Unemployment would average 7.6 per cent this year and then 8.8 per cent next year.

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The OECD said due to the high level of debt carried by Australians, a second wave of COVID-19 would create "debt-servicing problems" that would potentially drive property prices down further.

Under the second wave scenario, the federal budget would be in deficit by more than $210 billion and follow that with a $100 billion shortfall in 2021-22.

The OECD says policies such as JobKeeper and interest rate cuts have helped limit the financial damage so far but it suggests the government consider extending programs such as JobKeeper beyond the September end date.

The virus has infected 7.2 million people worldwide and killed nearly 412,000, about 180,000 of them in Europe, according to official figures tallied by Johns Hopkins University.

The OECD said on Wednesday that global economic output could fall by as much as 7.6 per cent this year if a second wave of infections emerges,

An aerial view of houses in Rose Bay and Point Piper in Sydney, New South Wales. Betfair is now offering gamblers betting markets to punt on Australian property prices during the coronavirus pandemic.

Only the economies of South Korea, India, China and Indonesia are expected to do better than Australia.

In the eurozone, which includes the 19 European Union countries that use the euro currency, GDP is expected to plunge 11.5 per cent this year in case of a second wave and by more than 9 per cent even if another round of infections is avoided.

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"Now we're in the midst of... perhaps the most global health, economic and social crisis and it's simply the most severe any of us have ever witnessed," OECD Secretary General Angel Gurria said.

He named tourism and air travel among the "critical" sectors hard hit by the pandemic and urged countries to co-operate in developing and fairly distributing a vaccine for the virus.

Source: 9News https://www.9news.com.au/national/coronavirus-second-wave-would-derail-australian-economy-oecd-warns/35bc8d56-05f2-434b-baa8-fc240a5701b0

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