Owen Raskovich

So, for example, if we say that the gross domestic product of Australia is going to fall by 5%, that means that all of the value created from all the products and services that we have inside the country is going to fall by 5%.

Of course, again, these are forecasts, but the historical figures are in actual fact what happened.

So, I mean, we know what happened in the past.

The future is what we're concerned about.

So in 2020, and I'm talking about calendar years here.

So if you ever see CY, when you look at a forecast, CY means calendar year and FY means financial year.

Or if you're in the US, fiscal year, they're both the same thing.

But we're talking about calendar years, CY 2020.

Commonwealth Bank has created two forecasts.

The first one is a 6% fall.

So if the economy falls 6% in 2020 versus 2019, and then in 2021, it recovers by 6%.

So just about making up everything that it lost.

And then in 2022, it grows another 3%, which would be more in line with our historical growth for the economy.

So we've got negative 6%, 6%, and 3%.

That's the first input that Commonwealth Bank put into this, I guess, quick recovery scenario.

The other thing that they look at is unemployment.

Unemployment is a really important factor as I'm about to get to in the podcast because unemployment determines how much people can borrow and how much people can borrow is based on their income, their ability to service a loan.

If you go to a bank and you punch in borrowing power calculator and you get some web result, the first thing that you'll be greeted with is this thing that says, what's your yearly income?

And that's because that is the single most important thing for any bank to consider when they lend you money.

And so with gross domestic product, they've said negative 6%, 6%, 3%.