Australia appears to be getting on top of coronavirus with strict social distancing measures. The authorities have said that the rate of daily infections has dropped in recent days. But what is the economic impact of the virus on the country?
This live coronavirus article has been updated on April 22, 2020.
2 April, 2020 | AtoZ Markets – Investors continue to monitor the development of the global coronavirus epidemic. It has already infected more than 954,972 worldwide and taken at least 48,354 lives, according to the latest data compiled by John Hopkins University. Markets have been volatile for the past few weeks, observing sudden movements back and forth. Authorities around the world have announced large stimulus packages to stem the economic impact of the virus.
Australia faced a sustained drop in the rate of new coronavirus infections. But officials and experts warned of complacency, stressing the need for strict new policies of social distancing. State authorities have enacted extensive powers to impose heavy fines and possible prison terms for anyone who breaks the rules. It includes banning public meetings of more than two people.
Health Minister Greg Hunt reported that there were approximately 5,137 cases of coronavirus nationwide. New infection’s growth rate is slowing on average by 9% in the past three days, compared to 25-30% a week ago. Of these, 50 people were in intensive care, and 20 were on respirators, said Hunt. The death toll in a country with almost 25 million stood at 25.
Based on the completion of more than 230,000 tests, the Australian case was less than 1%. It is significantly lower than the 10% reported by some other countries and suggesting “early promising signs of flattening of the curve “said Hunt.
Australia’s Strict Coronavirus Social Distancing Rules
The Government said that public gatherings should not be more than two people. Australians should stay indoors unless they buy essential items, exercise, go to work or receive care medical. The over 70s should isolate themselves. “Anyone who doesn’t need to go out should be at home,” said chief physician Brendan Murphy.
Prime Minister said it is now up to the states to determine how the two-person assembly limit will be enforced and that limit would result in fines. PM Morrison said the government had declared a “biosecurity emergency”. He described it as “a centenary event” but urged the public to remain calm.
“We have not seen this kind of thing in Australia since the First World War. But, we are up to this challenge,” he said. Under the new restrictions, workplaces, prisons and other “essential” places will continue to operate normally.
Morrison said Australians should not travel abroad anywhere – the first time such advice has been given in the country’s history. “The greatest risk we have and the greatest number of incidents we have which come from Australians returning from abroad,” he said.
Australia’s travel alert level has raised to level 4, which calls on all citizens to avoid international travel. Anyone arriving in the country from abroad will now have to self-quarantine for 14 days.
Major sporting and private events have canceled, and the government has taken unprecedented action to cancel Australia’s Anzac Day commemorations on 25 April. It is an essential annual ceremony in honor of the citizens who died at the time.
Australian Economic Stimulus Package
The Morrison government announced $130 billion support program. It is the largest plank in a series of measures to keep Australians in work and support those who unemployed, unprecedented in scale.
Each state and territory announced stimulus packages which, with the impact of the closings linked to COVID-19 on their revenues, should put them all in deficit.
At the end of March, the measures announced a total of $ 213.6 billion in direct budgetary spending from the federal government. $ 11.8 billion is from the states and $ 105 billion in loans from the Reserve Bank and the federal government.
Australia Eases Rules on Raising Capital
The Australian corporate regulator has temporarily relaxed specific rules to facilitate the raising of capital from listed companies due to the coronavirus pandemic. The news comes just as Australian companies have raised capital to boost their balance sheets. Moreover, the epidemic forces them to burn through cash while companies operate at reduced capacity.
The Australian Securities and Investments Commission (ASIC) has said it would allow companies to issue certain “low-doc” offers. It is such as rights offers, placements and stock plans, even if they do not meet the usual requirements. A “low doc” capitalization scheme exempts a company from issuing a prospectus for a capital raising. It is normally not available for a company whose shares have suspended from trading for more than five days during the previous 12 months.
These companies would normally prepare a prospectus or ask ASIC for an individual remedy, which can be costly and cause delays, the regulator said. But now a publicly-traded company whose shares have suspended from trading for up to 10 days in the past 12 months can forgo individual application.
Australia Stocks Surge During Coronavirus Pandemic
The Australian S&P/ASX 200 led the gains in the main markets of the region with a rise of 7.5% to close at 5,100.30. Moreover, the heavily-weighted financials sub-index increased by 8.5%. The shares of the so-called Big Four banks soared: Australia and New Zealand added 8.40%. Commonwealth Bank of Australia increased by 10.81%. Westpac increased by 8.43%, while National Australia Bank gained 7.78%. Rodrigo Catril, the currency strategist at the National Australia Bank, said:
“The big question is whether the huge stimulus will be enough to help the global economy weather the economic shock of COVID-19 containment measures”.
Economic Reform, Global Action After Virus
22 April, 2020 The number of confirmed coronavirus cases in Australia has risen to 6,647. Moreover, 74 people have died from the disease. The prime minister, Scott Morrison, turns his mind to economic reform and redesign of global organizations. Australia’s coronavirus infection rate drops. Prime Minister and Treasurer Josh Frydenberg are considering tax cuts, deregulation and industrial relations reform as part of a business-friendly package. Big companies are pushing for corporate tax cuts to be re-launched. It is after Frydenberg discussed reform opportunities with significant employer groups.
“We will consider tax reform as an area of interest because we are always looking for opportunities to reduce taxes,” he said. Industrial relations are becoming a key political battleground, while coronavirus infections are decreasing due to severe economic and social restrictions. The Prime Minister met with President Donald Trump on Wednesday on the need to improve global institutions such as the World Health Organization. Australia did not follow the US in withdrawing funding from the WHO. High-ranking ministers criticized the response of the United Nations agency to the pandemic.
Australia’s Economy to Shrink 10% in First Half of 2020
21 April, 2020 The confirmed cases of COVID-19 in Australia has increased to 6,625, while the number of deaths has risen to 71. Australia will experience its sharpest economic contraction since the 1930s in the first half of 2020 due to the coronavirus. Reserve Bank of Australia, Governor Philip Lowe said that domestic production would drop by about 10% in the first half of 2020. Most of this decline takes place during the June quarter. Unemployment is expected to be around 10% by June as the total number of hours worked is expected to drop by around 20%, he added. The unemployment rate was 5.2% in March.
“These are all very important figures that were inconceivable just a few months ago,” said Lowe. “They testify to the immense challenge facing our society to contain the virus.” The Australian Bureau of Statistics (ABS) stated jobs recorded by the tax office payrolls system fell 6% between March 14 and April 4. The system covers approximately 99% of large employers, those with 20 or more workers, and 71% of small employers.
Largest Drop in Economic Activity in History
20 April, 2020 The confirmed cases of COVID-19 in Australia has increased to 6,612, while the number of deaths has risen to 70. Up to 3.4 million Australians may be out of work in the coming weeks. Social distancing protocols paralyze entire industries that operate based on close human contact. New data from a Grattan Institute working paper has revealed that between 14 and 26% of all Australian workers may be unemployed. The large-scale effects of the restrictions will be felt months later.
Researchers believe a “second set” of economic hardship is on the horizon as COVID-19 restrictions worsen the impact of an already predicted recession. The second-round impacts of the COVID-19 crisis on employment and economic activity will also be serious. Businesses and households that are not initially affected by public health measures will cut spending to save cash in the face of a prolonged slowdown. Meanwhile, Australia is facing a synchronized slowdown among major trading partners, adding to the economic blow from COVID-19. The calculated impact of the extended restrictions affects 1.9 to 3.4 million unemployed people, with low-income workers being twice as likely to be unemployed as high-income workers.
Loss of International Students Set to Hole in Economy
17 April, 2020 The number of confirmed cases in Australia has increased to 6,507, while the total number of deaths has risen to 63. The Australian economy expected to reach $ 60 billion over the next three years. International students blocked from coming to Australia due to the COVID-19 pandemic. The eight most prestigious universities face the greatest loss of income, due to their higher number of international students. But regional and small universities are also likely to suffer serious financial consequences which could force them to separate from their staff and reduce their courses.
The Mitchell Institute at the University of Victoria predicts that the Australian university sector will lose between $ 10 and $ 19 billion between 2020 and 2023. It depends on how quickly the country’s borders will be reopened to students. The national economy would also lose between $ 20 billion and $ 38 billion in wider benefits. The global projection could cause a hole in the economy of $ 30 to $ 60 billion.
16 April, 2020 There were 6,462 confirmed cases of coronavirus and 63 deaths in Australia. Australia probably already plunges into its first recession in three decades. Whole sectors of the economy closed to fight the new coronavirus. It puts tens of thousands of people out of work and threatens the survival of many companies. According to Reuters poll predictions, Australia’s annual gross domestic product (GDP) might contract by 3.3% in 2020. Just a few months ago, analysts predicted economic growth of 2.3%.
“We anticipate a recession of unprecedented speed and magnitude for the Australian economy,” warned NAB chief economist Alan Oster. The last time it suffered a recession was in 1991. “The big blow gives in the second quarter when we can easily see the GDP drop by about 7%, then falling by another 1%.” The poll’s forecasts were almost as bad, at -6.8% for the June quarter. Many hopes that growth will rebound in the September quarter with an increase of 1.5%.
IMF Forecasts Australia’s Economy
15 April, 2020 There were 6,440 confirmed cases of coronavirus and 63 deaths in Australia. The International Monetary Fund (IMF) has warned that Australia will suffer its biggest economic blow since the Great Depression following the coronavirus crisis. The IMF predicted that Australia’s gross domestic product (GDP) would contract by 6.7%, or 130 billion Australian dollars (83.7 billion US dollars), this year. However, the Australian economy expected to grow by 6.1% in 2021. The IMF report indicates that the Australian unemployment rate will average 7.6% in 2020 before increasing to 8.9% in 2021.
Treasurer Josh Frydenberg said that Australia was a better place to deal with the economic impacts of the virus. “Australia is approaching this crisis from a position of economic strength,” he said. “Our measures are temporary, and proportionate to the challenge we face and will allow Australia to bounce back stronger on the other side.”
Unemployment Rate Predicted to Reach 10 per Cent
14 April, 2020 The number of confirmed coronavirus cases in Australia has risen to 6,400, and 61 people have died from the disease. The unemployment rate expected to reach its highest level in nearly three decades. New Treasury figures predict that the unemployment rate will double in the June quarter from 5.1% to 10%. Australia will go into recession as it faces the pandemic of COVID-19. It will be the first time that the unemployment rate has reached two figures since April 1994. This figure is a fraction below the maximum unemployment rate in Australia, which was 11.2% in 1992.
But Treasury estimates show that the unemployment rate would be much higher. It would peak at 15%, if the government had not intervened with the $ 130 billion wage subsidy program known as JobKeeper. “It is far greater than what we saw during the global financial crisis more than a decade ago,” said treasurer Josh Frydenberg in a statement.
Australian Treasurer Predicts Significant Increase in Unemployment
13 April, 2020 According to the Australian Department of Health, the number of new confirmed cases increased by 46. It is the lowest rate in a month and less than a tenth seen two weeks ago. Australia has now recorded 6,359 cases, with 61 deaths. Josh Frydenberg, the federal treasurer, has warned that it is “very dangerous and unrealistic” to go beyond medical advice, as Australian governments consider attempts to loosen COVID-19 restrictions. Federal treasurer predicted “significant” increase in unemployment due to coronavirus. Government had no plans for changing the GST (Goods and services tax). Growth alone could be enough to pay off the $ 214 billion debt of economic support.
He revealed that 802,000 businesses had applied for the job keepers wage subsidy for millions of employees. More than 600,000 workers had applied for early access to their retirement pension due to financial difficulties. He suggested that the number of those wishing to have access to retirement could decrease. Many had expressed interest before the $ 130 billion wage subsidy program announced and passed by Parliament. The treasurer also said the government had “no plans” to expand eligibility for the bi-monthly payment of $ 1,500. He said that “a discretion for him to do so without recalling parliament designed for unforeseen circumstances”.
Lockdown Impacts Australia’s Economy
10 April, 2020 There were 6,152 confirmed cases of coronavirus, 53 deaths and 987 recovered in Australia. Brendan Coates, director of the Grattan Institute household finances program, said the COVID-19 impact on the economy was unprecedented. It is certainly greater than anything that Australia has experienced since the Great Depression. It estimated that there would be a fall of 2% of annual GDP for each month due to lockdown. Coates said Australia has so far “integrated” the direct costs of the public health crisis, including $ 320 billion in government rescue programs. But there was also a “second set” of impacts which could be even worse.
However, he cautioned against focusing on debt. He also said government support was very cheap due to low-interest rates that were lower than the cost of inflation. “I don’t think it should distract us at the moment from worrying about doing what we need to do,” he said. “Interest costs are going to be very low, and debts in the past, like during the Second World War.’
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