The Treasurer said things will get worse before they get better.
Mr Frydenberg handed down his 'mini-budget' today and said Treasury was forecasting the unemployment rate would hit 9.25% in the December quarter.
The Treasurer said if not for the JobKeeper and JobSeeker schemes, the unemployment rate would have peaked 5% higher and another 700,000 jobs would have been lost.
Mr Frydenberg said the figures released last week which showed the unemployment rate rise to 7.4% were devastating.
"Australia is experiencing a health and economic crisis like nothing we have seen in the last 100 years," Mr Frydenberg said.
"In March and May 870,000 jobs were lost and more than one million Australians saw their working hours reduced in many cases to zero."
"The economic outlook remain very uncertain and recent outbreaks in Victoria are testament to this."
Treasury was forecasting real GDP to fall 7% in the June quarter (which would be by far the biggest quarterly contraction on record), unemployment to remain around 8.75% in 2020/21, and gross debt to be 45% of GDP in the same period.
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Recent figures have shown job losses have worst hit young people, but Mr Frydenberg said there was good news for this group.
"The idea is to give young people more of an opportunity to get into work," he said.
"And the good news was in the June numbers... 48% of those jobs that came back were for people aged 15 to 24, and that is a very positive sign, because the sectors that were hit hardest included the retail sector, including the hospitality sector, the arts sector and recreation sector.
"So gradually as restrictions are eased, people are coming back into those sectors and that means women and young people who are too of the groups that have been particularly hard hit."
The Treasurer said there were some encouraging signs there would be a return to normality as lockdown measures were eased.
"There are some positive early signs in the recovery with indicators suggesting that the unwinding of containment measures in the latter part of the June quarter has led to a noticeable recovery in activity and jobs," he said.
"Household consumption is expected to lead the recovery with strong growth in the September quarter, while business and dwelling investment are expected to recover more gradually."
Real GDP, via Josh Frydenberg pic.twitter.com/kxCQgsvFje— Tom McIlroy (@TomMcIlroy) July 23, 2020
Mr Frydenberg said the government was spending $289 billion to combat the COVID-19 pandemic, worth more than 14% of GDP.
"About 99% of the federal government's special pandemic spending is this financial year and next, and the Coalition believes the measures will maintain the structural integrity of the budget," he said.
"Every resource available to the government has been marshalled to defend the nation against the coronavirus,"
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