Daily Commentary BY THE CURVE TEAM –

The Long Haul Out Of Lockdown

26th of May, 2020

As the economy starts to emerge the Prime Minister is set to sound a warning for the outlook.

Fresh from the revelation that the JobKeeper program was not as widely adopted as first expected, the Prime Minister is set to announced the future of the program and what comes next today. Ahead of a speech today, it has been revealed that the government will aim to wean the economy off subsidies and welfare and focus on helping businesses grow out of the crisis.

The Prime Minister wants to get the economy out of the ICU and “off the medication’’ sooner rather than later. He is set to reveal plans that will form the JobMaker program later today. It is set to be a series of reforms as well as targeted support for up-skilling and training to help businesses get the resources they need to grow their way out of the crisis.

He is also set to warn that exiting the containment measures could cause more pain:

“Success in this current phase will not be easy. It cannot be assumed. It will not be business as usual. Opening up will be harder than closing down.’’

This won’t be welcome news to those who were hoping that the $60bln that is set to be saved following the overestimation of the cost of the JobKeeper program would be spent elsewhere. We are set for further details which will be announced later today.

While the domestic outlook appears a little brighter as restrictions roll back, much of the outlook still hinges on the speed with which the rest of the world can contain the virus. Only once international borders are able to reopen can we expect anything resembling normal to occur and until then a cloud will hang over the outlook.

David Flanagan

Director - Interest Rate Markets