The treasurer Josh Frydenberg says the current restrictions Australian governments have adopted to stop the spread of coronavirus – restrictions likely to taper down from this Friday – are resulting in a reduction in economic activity worth $4bn per week.

Frydenberg will use a speech to the National Press Club on Tuesday to warn the economic shock associated with Covid-19 will be both profound and prolonged, with Treasury estimating a 10 to 12% fall in gross domestic product during the June quarter alone.

According to a speech extract circulated in advance, Frydenberg will say the negative economic impact here would have been more profound if Australia had followed Europe in imposing broader lockdowns of all non-essential services. “If these restrictions were increased even further, akin to the eight week lockdown in Europe, then the adverse impact on GDP could double to 24%, or $120bn, in the June quarter.

“This would have seen enormous stress on our financial system as a result of increased balance sheet impairments, widespread firm closures, higher unemployment and household debt. This was the cliff we were standing on.”

But he says for every extra week the current restrictions remain in place, Treasury estimates that we will see close to a $4bn reduction in economic activity from a combination of reduced workforce participation, productivity and consumption.

The treasurer’s speech to the National Press Club coincides with a meeting of the national cabinet to consider easing the current restrictions, one of two deliberations scheduled this week. It is expected governments will start easing the lockdowns later this week.

Frydenberg will say governments will continue “to be guided by the expert health advice and seek to ease restrictions in a way that minimises the health risk and maximises the economic activity”.

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While Australia’s success in suppressing infections may lead people to think the country has turned a corner, Frydenberg will issue a warning that economic conditions will “get considerably worse in the period ahead before they get better” because the sectors hardest hit by the social distancing restrictions imposed since the middle of March are the biggest employers. The retail and hospitality sectors employ more than two million Australians.

Credit card data suggests spending on the arts and recreational services, accommodation and food services plunged by between 60% and 70% during April compared with consumption at the same time the previous year.

“Despite the toilet paper boom and the record increase in retail trade in March due to panic buying, overall consumption, according to NAB data, has fallen 19.5% since the start of the year, with declines across all jurisdictions,” Frydenberg will say on Tuesday.

Victoria has seen the steepest falls in consumption at 23%, compared with Tasmania, which has seen a fall of 14.9%.

“The economic shock is much broader than the impacts on these sectors. GDP is now expected to fall significantly, with Treasury forecasting a fall in the June quarter, the equivalent of around $50bn,” he will say.

Treasury is forecasting a doubling in the unemployment rate. Frydenberg will declare it is imperative to get people back working again. “History shows that the longer people are unemployed, the harder it is to get a job.”

“In the early 1990s, unemployment increased by 5% over three years, but took seven years to get back to its pre-crisis level. As has been remarked, unemployment went up in the elevator, and went down by the stairs.

“In the current coronavirus, it is expected the unemployment rate will go up by around 5% in three months, let alone three years. It underlines the importance of getting people back to work as soon as possible to avoid the long-term economic and social impacts from a high unemployment rate.”

Frydenberg will foreshadow policy reforms once the crisis has passed to drive economic recovery. He will also warn about the risks of rising protectionism as a consequence of the pandemic. “There is a risk that protectionist sentiment re-emerges on the other side of the crisis, and for that we must be vigilant.

“While we must always safeguard our national interest, we must also recognise the great benefits that have accrued to Australia as a trading nation.”