Australia faces a different economy over the coming years as a result of the drop in migration due to the pandemic-induced closure of international borders.
It will also weigh on the pace of Australia's economic recovery from recession, leading economist Chris Richardson says.
The latest Deloitte Access Economics quarterly business outlook predicts the population will be about 600,000 smaller over the next two years than earlier forecast, even if Australia opens international borders gradually through 2021.
"Australia's an unusual nation," Mr Richardson, a partner and economist at Deloitte told AAP.
"For most nations around the world if you don't get migrants its doesn't matter."
But for Australia, migration is tied to a bunch of sectors, like housing and commercial construction and higher education.
"It does look like quite a different Australian economy going forward, even if the flows go back to what they used to do," he said.
"That loss of migrants will have impacts for many years. It weighs on the pace of recovery."
It is another reason to believe interest rates will remain "nailed to the floor" until at least until to mid-2024, Mr Richardson said.
Mr Richardson said there are a number of reasons that interest rates will remain low for a long time and not just in Australia.
This is a big recession, which normally means unemployment will rise faster than it takes to come down and at a time when inflation is as "dead as a door nail".
The report forecasts the unemployment rate rising to 8.6 per cent next year, when the Australian Treasury is expecting a peak of eight per cent by the end of this year.
Mr Richardson also believes governments, as seen in the wake of the global financial crisis, will withdraw support sooner than they should due to the politics of debts and deficits.
"Interest rates are more powerful than ever, so when they go up, they'd flatten economies," he said.
Turning to the federal budget, Mr Richardson said even with its tax cuts for families and businesses, Australia still faces a big cash crunch between now and end-March 2021.
JobKeeper and JobSeeker payments are being dialled back, money from early access to superannuation is drying up and a range of mortgage and rent deferrals will run out.
Shadow treasurer Jim Chalmers jumped on the comments.
"It beggars belief that the Morrison Government has cut JobKeeper in the middle of a deep and damaging recession, at a time when unemployment is rising and the government expects another 160,000 Australians to be unemployed by Christmas," he told AAP.
Australian Associated Press