NSW Treasury's chief economist says the state's economy is headed for a recession for the first time in nearly 30 years as a result of the COVID-19 pandemic.
Stephen Walters on Friday told an upper house inquiry into the NSW government's management of COVID-19 that the state economy was suffering as a result of the restrictions in place to limit the spread of the virus.
"It's pretty clear the economy of NSW is in a recession," he told the inquiry.
"It's our first for nearly 30 years."
Government sources argue it's too early to definitely categorise the NSW economy as being in recession.
A Treasury spokesman later on Friday said the department's modelling of the impact of the virus on gross state product growth "continues to evolve".
Source: AFP
Mr Walters suggested NSW's unemployment rate will rise further after the Australian Bureau of Statistics on Thursday reported it increased 1.1 points to six per cent with more than 221,000 people losing their jobs in April.
The ABS data also indicated the national unemployment rate will rise to 10 per cent in the coming months.
"(That) is very consistent with what has happened in previous recessions," Mr Walters said on Friday.
"The fact that unemployment got to 10 per cent in the 1980s recession, 11 per cent in early '90s recession - those are probably ballpark numbers as to where unemployment is going in this downturn as well."
NSW Treasury secretary Michael Pratt said the coronavirus and the suppression of activity to manage its spread had a "profound" impact on the state's economy.
"It is likely national and state economies have entered a period of recession - the first for three decades," he told the inquiry.
Mr Pratt added the impact of the virus could change the state's economy in the long term - including its relationship with China.
NSW Treasury had predicted 400,000 jobs would be lost if the state went into a six-month lockdown but, given restrictions have been eased and the economy has started to open up, that number is now expected to be lower.
NSW Treasurer Dominic Perrottet on Friday acknowledged the state was "facing the biggest health and economic challenge of our generation".
"All of NSW needs to pull together at this time and our number one goal is saving and creating jobs," he told AAP in a statement.
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