Victoria Delivers Economic Warning for Property Prices, Unemployment

Victoria has released new economic modelling in the wake of the Reserve Bank and Federal Treasury announcements, warning that as many as 270,000 jobs could be lost in the state this year as a result of the coronavirus pandemic.

The Department of Treasury and Finance modelling shows the potential impact Covid-19 may have on the state’s economy.

The figures forecast that Victoria's unemployment could peak at 11 per cent in the September quarter this year. The state's current rate sits at 5.3 per cent.

Under the modelling, gross state product is predicted to decline by 14 per cent in the June quarter relative to previous forecasts

The treasury and finance outlook is based on Covid-19 restrictions in place for six months at stage three.

The outlook also predicts that Victoria's property prices could fall by 9 per cent from March to December 2020.

“These numbers confirm what the governor of the Reserve Bank and the Federal Treasury have made clear – Australia is facing an unprecedented economic crisis,” Treasurer Tim Pallas said.

The economic modelling comes as the state seeks $24.5 billion in emergency funding, which Pallas describes as “vital” in ensuring the state “gets to the other side” of the pandemic.

The funds are also expected to go towards $8 billion of funding for construction projects underway across the next two years, which Pallas describes as part of the state's “plan for economic recovery”.

The Victorian Treasurer said the state was in a position to support businesses, workers and families during Covid-19, but that the additional funding was “dedicated to ensuring we can act quickly to respond to the crisis, save jobs and recover once the pandemic is over”.

The bill is before the Parliament this week.

In a Wednesday statement, Victorian premier Daniel Andrews said that the “road to recovery” would be “longer than first expected”.

“The economic impact of coronavirus will get significantly worse before it gets better.”

“It is impossible to overstate the devastating impact the coronavirus pandemic is having on lives and livelihoods.”

Parliament plans to sit this Thursday to pass legislation on measures including tenancy reforms.

Last week Victoria announced a $500 million package placing a temporary ban on evictions, a pause on rental increases for a six month period, as well as a land tax relief package for landlords.

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