Australia, insurance, car, home, live, holidays

The re-emergence of coronavirus in Victoria is expected to slice up to $3.3 billion from national GDP in the September quarter.Credit:Chris Hopkins

Economists and the federal government had been expecting a sharp bounce in activity through the quarter after a deep recession in the March and June quarters. Instead,growth will be lower and unemployment higher because of Victoria's struggles.

Figures from the Australian Bureau of Statistics on Wednesday give an early indication of the economic problems caused by the spread of coronavirus across Melbourne.

While national retail sales were up by 2.4 per cent in June,part of the increase was due to stockpiling of goods by shoppers in Victoria.

The preliminary data showed sales through cafes,restaurants and takeaway food services jumped by more than 20 per cent for the second consecutive month as the sector reopened.

Despite the strong result,sales through the sector are still down by 17 per cent on the same time last year. Food retailing rose by another 0.9 per cent following a 7.2 per cent jump in May.

The bureau noted there was a lift in stockpiling through the end of June with people again panic buying toilet paper,flour,rice and pasta. According to the bureau,this stockpiling was most evident in Victoria.

Global ratings'agency Moody's on Wednesday said it expected all states and territories to increase their borrowings sharply to deal with the pandemic recession,which has hit many key sources of revenue.

Victoria had expected to borrow $5.5 billion last financial year but instead ended up borrowing $20.9 billion. Moody's is tipping it will borrow between $20 billion and $24 billion in 2020-21 while its debt level is expected to climb from $36 billion to a forecast $50 billion.

Victorian Premier Daniel Andrews said the government was facing"significant expenses"due to the pandemic.

He rejected calls for the government to consider a budget surplus,saying this would mean cuts to hospitals and schools that made"no sense of all".

"We need to build and we need to invest and we need to be perhaps more focused on household budgets than we are on immediate repair of the state budget,"he said.

Sign up to our Coronavirus Update newsletter

Get our Coronavirus Update newsletter for the day's crucial developments and the numbers you need to know. Sign up toThe Sydney Morning Herald's newsletterhere andThe Age'shere.

License this article