[Asia Economy Reporter Park Byung-hee] Goldman Sachs has lowered its forecast for Australia's economic growth rate this year from 4.7% to 4.2%, Bloomberg reported on the 23rd (local time).
Goldman Sachs explained that lockdown measures due to the spread of the COVID-19 Delta variant will cause an economic slowdown. Australia was considered a model country in quarantine, but as the COVID-19 Delta variant spread, strong quarantine measures were imposed in major cities such as Sydney and Melbourne. Sydney, Australia's largest city, is the capital of New South Wales (NSW), and Melbourne is the second largest city in Australia and the capital of Victoria. New South Wales and Victoria account for half of Australia's GDP.
Goldman Sachs expects household consumption to decrease and the construction industry to contract due to the lockdown measures.
Goldman Sachs forecasts that Australia's gross domestic product (GDP) in the third quarter of this year will decrease by 2% compared to the second quarter. Although the fourth quarter GDP is expected to rebound by 1.8%, it anticipates that lockdown measures will be lifted more gradually than in the past. It also stated that the slow lifting of lockdown measures will put pressure on the growth rate.
Andrew Boak, an economist at Goldman Sachs, diagnosed, "Since early July, when the Reserve Bank of Australia announced plans to reduce the scale of quantitative easing, the downside risks to Australia's macroeconomy have increased significantly."
Unlike this year, Goldman Sachs has revised upward its forecast for Australia's economic growth rate next year from 3.8% to 4.2%.
Goldman Sachs expects that, considering the current vaccination pace, the proportion of adults who have completed the second dose in Australia will reach 70-80% by mid-November this year, achieving the government's target. Currently, the proportion of adults who have received the second dose is 30%.
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