NT economy could lose $412m, with household spending set to crash, according to RBA forecast

A FORECAST crash in household consumption could result in more than $400 million worth of lost spending in the NT by the end of the June quarter.

A FORECAST crash in household consumption could result in more than $400 million worth of lost spending in the NT by the end of the June quarter.

The Reserve Bank of Australia, in its latest forecasts released on Friday, modelled three main scenarios for the economy, based on when COVID-19 restrictions were lifted.

In its central scenario, household consumption – one of the key indicators of the shape of economic recovery – was set to contract 15 per cent by June.

Based on annual household consumption in the NT of $11 billion, independent analysis provided to the Sunday Territorian shows this would mean $412.5 million in lost spending by Territory households this quarter.

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“Much of the decline is expected to be concentrated in services, such as travel and entertainment, most affected by activity restrictions,” the RBA reported.

“Travel restrictions have also induced a sharp decline in tourism-related and education service exports, and it is not clear how quickly these will recover.”

The RBA forecasts unemployment will jump to 10 per cent in June, coupled with a sizeable decline in the participation rate.

“If realised, this would be the highest rate of unemployment since 1994,” it wrote.

Earlier this week Prime Minister Scott Morrison released figures which showed an estimated 21,400 jobs could be lost in the NT by the end of June, nearly double the number of jobs that have already been lost since lockdown measures began.

Chamber of Commerce NT chief executive Greg Ireland said he and other peak industry groups were “concerned” the NT government was yet to fully realise the impact of those job losses to the short-term economy.

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Mr Ireland said the NT Government, with help from the private sector, needed to formulate a plan to drive the key industries needed for recovery.

According to the RBA, mining investment is likely to be weaker than previously expected, as some large proposed LNG projects have been delayed due to plummeting oil and LNG prices.