The budget deficit could blow out to $160 billion next financial year, Westpac believes, as stimulus measures and a collapse in tax revenues due to the coronavirus pandemic wreak havoc on the Morrison government's fiscal strategy.

The bank also predicted the unemployment rate would jump to 11.1 per cent over the next three months, pushing up to 814,000 people onto the jobless queue, and the economy was headed for its biggest short-term contraction on record.

Consumer confidence on Tuesday slumped to its lowest level since Australia's last recession in 1990-91 and more firms announced store closures as the economic damage from efforts to control the virus continued to grow.

Westpac chief economist Bill Evans, who last week said unemployment was likely to peak at 7 per cent, said it now appeared the situation was markedly worse.