Economic forecasting is difficult at the best of times. It is even harder at times like this when we are experiencing a once in a lifetime event. Given this, I don't think it makes sense at the moment to focus on forecasts to the nearest decimal point, as we often do. Instead, I would like to focus on mo broad issues: 0 the immediate outlook for the economy 0 the nature and speed of the recovery. The next few months are going to be difficult ones for the Australian economy. One very obvious consequence of the efforts needed to contain the virus is that many normal activities are restricted or not permitted. This means that, for as long as these restrictions are in place, we don rt have the jobs and incomes that come from these activities. On top of this, there is a high level of uncertainty about the future, which means that many households and businesses are holding back their spending and investment. The result of both the restrictions and the uncertainty is that over the first half of 2020 we are likely to experience the biggest contraction in national output and income that we have witnessed since the 19305. Putting precise numbers on the magnitude of this contraction is difficult, but our current thinking is along the following lines: 0 National output is likely to fall by around 10 per cent over the first half of 2020, with most of this decline taking place in the June quarter. 0 Total hours worked in Australia are likely to decline by around 20 per cent over the first half of this year. 0 The unemployment rate is likely to be around 10 per cent byIune, although I am hopeful that it might be lower than this if businesses are able to retain their employees on lower hours. The unemployment rate would have been much higher than this without the government's JobKeeper wage subsidy. These are all very large numbers and ones that were inconceivable just a few months ago. They speak to the immense challenge faced by our society to contain the virus. ; difcult to be precise and it makes sense to think in terms of scenarios. Consistent with his, the Bank will discuss some possible scenarios in the Statement on Monetary Policy in a ew weeksr time. he plausible scenario is that the various restrictions begin to be progressively lessened as ve get closer to the middle of the year, and are mostly removed by late in the year, except .erhaps the restrictions on international travel. Inder this scenario we could expect the economy to begin its bounceback in the eptember quarter and for that bounce-back to strengthen from there. If this is how things .Iay out, the economy could be expected to grow very strongly next year, with GDP growth If perhaps 6? per cent, after a fall of around I5 per cent this year. There is though quite a at of uncertainty around the numbers, with the exact profile of the recovery depending not .nly upon when the restrictions are lifted but also on the resolution of the uncertainty that .eople feel about the future. : is harder to make forecasts about the unemployment rate given the uncertainty about now many employees will remain attached to their firm and whether people who are stood lown will be looking for employment and thus be counted as unemployed. But it is likely hat the unemployment rate will remain above 6 per cent over the next couple of years. 'v'ith many firms delaying or cancelling wage increases, yearended wage growth is :xpected to decline to below 2 per cent, before gradually picking up again. In underlying erms, inflation is expected to remain below 2 per cent over the next couple of years. If course, there are other scenarios as well. On the optimistic side, the restrictions could be fted more quickly, with the virus being contained. In that case, a stronger recovery could .e expected, particularly in light of the very large monetary and fiscal support that is in .lace. On the other hand, if the restrictions stay in place longer, or they have to be eimposed, the recovery will be delayed and interrupted. In that case, the loss of incomes ndjobs would be even more pronounced