22 Oct 2008

Australia's jobless rate expected to hit 1m in 2010

8:07 pm on 22 October 2008

Australia's jobless rate will more than double between now and 2010, when more than 1 million people are expected to be out of work, as China feels the effect of a global economic slowdown, a leading investment bank says.

JPMorgan Australia's chief economist Stephen Walters said a slowdown in China will be detrimental to job creation in Australia in the next two years.

"We now expect the jobless rate to more than double to nine per cent in late 2010, from the current 4.3 per cent," Mr Walters said.

"Softer growth in one of Australia's leading export destinations means Australia's export volumes will be lower, as will be the terms of trade. That said, on our forecasts, there will be one million unemployed Australians by the second half of 2010."

September 1994 was the last time the nation's jobless rate started with a nine, when it registered 9.1%.

Meanwhile, Australia's gross domestic product growth is expected to fall to 1.4% in 2009, based on reduced expectations for expansion in China, Mr Walters said.

An expected slowing in export volumes, lower business investment and reduced household spending, which constitutes 60% of the economy, also prompted the growth outlook downgrade.

Growth forecasts for China have been scaled back from 9.5% to 8.7% in 2009, Mr Walters said.

The Chinese government said on Monday its economic growth was 9.9% for the first three quarters of this year, down from 11.9% last year.

It is the second time in two weeks that JPMorgan has downwardly revised its estimates for 2009 Australian economic growth. It had previously forecast GDP growth to fall from 2.5% to 1.8%.

However, Mr Walters has also forecast GDP growth to rise to around 2.5% in 2010, and for the jobless rate to start to fall in 2011.