The Reserve Bank of Australia has made a grim prediction about the future of international travel.
On March 25, Prime Minister Scott Morrison issued a ban on international departures in a bid to curb the spread of COVID-19.
On Friday, in a new statement on monetary policy, the RBA said restrictions on international departures and arrivals are expected to continue for at least another 12 months, under a ‘baseline scenario’.
“The baseline scenario assumes that no additional large outbreaks and accompanying strict containment measures occur within Australia and that restrictions continue to be gradually lifted nationally (or are only tightened modestly for a limited time),” it said.
“Some restrictions on international departures and arrivals are assumed to be in place until around the end of 2021.”
The end of 2021 timeline is two quarters later than first outlined by the RBA its August Statement.
Under this scenario, the GDP is expected to contract by 4 per cent to December 2020, but then grow by 5 and 4 per cent in December 2021 and 2022 respectively.
The unemployment rate is also expected to peak just below 8 per cent, before gradually declining in 2021 and 2022.
A plausible downside scenario considers the possibility that Australia experiences “further major outbreaks and there is a loss of control of the virus in other economies”.
“In this scenario a substantial share of the population faces renewed distancing restrictions and curbs on business activities, and the opening of international borders is delayed further,” the RBA said in the quarterly statement.
The RBA also acknowledged that a stronger economic recovery is also possible but reliant on the progress in medical treatment and the ability to control the virus.
“It is also plausible that the appetite for long-haul international travel could remain depressed for a long time, even after borders reopen.”