As the coronavirus pandemic pushes Victoria towards a "catastrophic" economic downturn not seen since the 1990s, the state will lift its tight restrictions on elective surgery.
The state government on Wednesday released Department of Treasury and Finance modelling, which forecasts 270,000 Victorians could be out of work as a result of the health crisis.
Unemployment is expected to peak at 11 per cent in the September quarter, which is more than double the current rate.
Economic output for the nation's second-most populous state is forecast to drop by $32 billion - or more than $1 billion a week - over the next six months.
The modelling is in line with the Reserve Bank of Australia's forecasting, which predicts the national economy will contract by about 10 per cent over the first half of 2020.
Governor Philip Lowe said on Tuesday national unemployment could peak as high as 10 per cent in June and may remain above six per cent for two years.
The property market, a major source of Victoria's government revenue, is also expected to take a hit, with house prices predicted to fall by up to nine per cent by the end of the year.
"From a government point of view, these figures are bleak and quite frankly catastrophic," Treasurer Tim Pallas said on Wednesday.
"Let's not sugarcoat it, we are in for difficult times.
"It's worse than I thought we'd land."
The government is seeking to borrow $24.5 billion to fund a recovery process it expects to take years rather than months while it is also locking in $8 billion of funding for infrastructure projects already underway.
The economic modelling assumes coronavirus restrictions will remain in place for six months despite a slowdown in the number of new cases daily.
Opposition Leader Michael O'Brien said the numbers are a worst-case scenario designed to scare Victorians and justify the borrowing of $25 billion.
"We need a jobs-led, business-led recovery, not one full of higher taxes and government waste," he said.
Meanwhile, Victoria will follow Tuesday's federal advice and resume some elective surgery after it was put on hold to protect the health system.
Premier Daniel Andrews flagged the possibility of further easing restrictions if the numbers continue to stabilise but warned against acting too quickly.
Under the stage three restrictions, Victorians are only allowed to leave home for food and supplies, medical care, caregiving, exercise, work or education.
In the past 24 hours, Victoria Police have fined 95 people for breaking the rules, including three people they say "booked a short stay accommodation so they could hang out and take drugs".
