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Economists warn against ‘squandering our success’ with early lifting of coronavirus lockdown

Hundreds of economists have cautioned the Morrison Government against relaxing social distancing measures too early, warning such a move could cause unnecessary loss of life and impede Australia’s economic recovery.

The open letter — released Monday — has more than 200 signatures and growing, including current Reserve Bank board member Ian Harper, former RBA board member Warwick McKibbin, former Treasury and RBA officials, and prominent academic economists.

It comes as debate heats up about the wisdom or otherwise of relaxing Australia’s social distancing measures as the rate of community transmission of COVID-19 falls.

Health officials have said the key to preventing Australia’s health system from being overwhelmed by severe coronavirus cases is to keep community transmission of the disease low until a vaccine is discovered, providing one is successfully developed.

However, with the rate of community transmission continuing to trend downwards, there are growing calls for Australia’s strict social distancing measures to be relaxed.

Economists expect next month’s unemployment figures will show a huge spike in job losses, with millions of Australians either having lost their jobs or experiencing reduced hours.

A new household survey from the ABS estimates that around 1.6 million people lost their incomes from work between early March and the first week of April.

Business and consumer sentiment has experienced extreme declines.

The Grattan Institute think tank has also warned, in a new report, that between 1.9 million and 3.4 million people could be out of work in coming weeks — with the unemployment rate potentially hitting 15 per cent — as a consequence of the COVID-19 shutdown.

“If our estimates are even close to accurate, Australia is facing either the worst or one of the worst economic downturns in its history,” the paper warned.

“The longer the downturn goes, and the worse it gets, the less likely the labour market can spring back afterwards.”

The Federal Government has signalled it will start easing some restrictions next month, depending on the health situation.

However, the open letter from economists cautioned the Morrison Government and state premiers not to lift social distancing measurers too early, saying it could undermine the good work that has already been done:

On Monday, New South Wales Premier Gladys Berejiklian said NSW recorded six new cases of the virus over the past 24 hours which, even though low, highlighted how important it was not to relax too much, too soon.

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