The jobless rate is expected to hit 1.4 million by June after businesses closed and workers were pushed out of jobs due to the coronavirus.
The grave forecast is almost twice the level of 5.1 per cent recorded in February before the coronavirus began to shut down the economy.
Treasurer Josh Frydenberg confirmed last night the 10 per cent rate was expected.
He says the $130bn jobkeeper scheme passed by parliament last week to subsidise the wages of staff kept in employment is softening the impact of the virus.
“In the absence of the $130 billion jobkeeper payments, Treasury estimates the unemployment rate would be five percentage points higher and would peak at around 15 per cent,” Frydenberg said .
“More than 800,000 businesses have already registered for jobkeeper payment, which will allow the economy to recover more quickly once we are through to the other side of the crisis.”
But the predicted 10 per cent jobless rate would be the highest jobless rate since April 1994, when Australia was still recovering from the 1990-91 recession.
The treasurer will be talking to his G20 counterparts this week by phone to gauge the impact of COVID-19 on other countries.
However, Mr Frydenberg said he had “no hard and fast numbers as yet” to reflect the actual size of the virus impact in Australia.
That hasn’t stopped financial market economists making their own predictions on what the outlook might look like, which is likely to be a deep recession.
For example, Westpac economists are predicting three consecutive negative quarters of economic activity – 0.7 per cent in the March quarter, a massive 8.5 per cent in the June quarter and 0.6 per cent in the September quarter.
Even though they expect the December quarter will show a huge 5.2 per cent rebound as restrictions are eased and businesses reopen, it would still leave growth five per cent lower over the year.
Australians will get the first taste of what the pandemic has meant for unemployment when March labour force figures are released on Thursday.
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