• Professor John Hicks said regional NSW will feel the effects of the recession than metropolitan areas
• Charles Sturt economics academic said Australia’s recession is due to the country’s public health response to COVID-19
• Shutting down production was the beginning of the decline of the economy

A Charles Sturt University economics professor said regional economies can expect to feel the short- and long-term effects of the recession more than metropolitan areas.

It was announced on Wednesday 2 September that Australia had entered a recession for the first time in almost 30 years because of a severe economic downturn.

Economics lecturer in the School of Accounting and Finance and member of the Institute for Land, Water and Society Professor John Hicks (pictured) said regional NSW was already suffering from a range of devastating blows which were exacerbated by COVID-19.

“Throughout NSW, regional economies have been confronted by a range of compounding issues – drought, bushfire, flooding and now COVID-19,” he said.

“COVID-19 hit at a time when regional economies were already under significant stress.”

Industries that regional areas depend on, predominately related to tourism, have been impacted, and Professor Hicks said there is no chance of recovery without a return to previous tourism levels.

When production was shut down and spending was curtailed due to lockdowns, Professor Hicks said it started a downward spiral Australia would struggle to recover from.

“From its beginnings, the recession progressed in textbook style with a reduction in demand spreading throughout the economy,” he said.

“In addition, all economies throughout the world were experiencing similar difficulties and this further contributed to the decline in demand, pushing us even further into recession.”

Periods of economic downturn in the past 30 years have been recovered from quickly but the public health response to COVID-19 has prolonged the economy’s recovery in 2020.

Household saving increased as families and businesses reacted to the trying times but Professor Hicks said that behaviour is the opposite of what the economy needs.

“Businesses and families are doing what they can, they are conserving their resources to meet future needs, however, this actually makes the economic problem worse,” he said.

“Understandably, we feel the need to refrain from profligate expenditure; the economy, on the other hand, needs us to spend, and spend big.”

He said as people adhere to the ongoing public health advice in regard to the pandemic, the economic woes that accompany it are likely to grow worse over time.

“Relief, under these circumstances, is entirely dependent on the advent of a successful vaccine,” he said.

“Without a vaccine, or change in the public health response to COVID-19, the economy will remain in recession.”