Treasurer Josh Frydenberg has promised the government’s stimulus package to counter the effect of the coronavirus crisis on the economy will be announced “sooner rather than later”.
Mr Frydenberg reiterated the impact on the global economy from covid-19 will be significant and Australia is not immune to it.
“There will be a comprehensive suite of measures that are designed to provide a significant boost to the Australian economy to help businesses stay in business and Australians stay in jobs,” he said in Melbourne on Saturday.
AMP capital chief economist Shane Oliver is forecasting an economic contraction in both the March and June quarters, which would mark Australia’s first recession since the early 1990s.
He expects an initial stimulus of $3-5 billion but he believes there will be a need to increase it to around $20 billion by the time of the May budget to include a boost for households.
“So for now, much of the pressure remains on the (Reserve Bank),” Dr Oliver said.
Opposition Leader Anthony Albanese agrees there is an urgent need for a stimulatory package, having visited retail businesses in Hurstville, Sydney, on Saturday.
“We’ve heard firsthand today of declines in activity at some of these restaurants, furniture shops and other businesses of between 50 and 80 per cent,” he said.
“The fact is this economy was tanking well before the bushfires and the coronavirus. The economy needed support much earlier.”
Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, expects the package will include direct subsidies for affected businesses, as well as some deferred taxes.
“We’re hoping for an investment allowance which will encourage not just small business, but big businesses which have got deeper pockets, to go out there and spend, and hopefully spend that money on small business suppliers,” he told Sky News.
Liberal backbencher Andrew Laming also hinted the government was preparing a COVID-19 awareness campaign to try and stem panic buying.
“I am anticipating a very large nationwide awareness campaign with useful information about how to conduct oneself prior to a pandemic being declared and during,” Dr Laming told ABC television on Saturday.
The world catches a cold
World financial markets continue to be rocked by the spread of COVID-19 and the risk it poses to economic growth, with confirmed cases now exceeding 100,000 globally.
Confirmed cases in Australia have topped 70.
The Australian share market looks set for a fall of around 1.5 per cent on Monday after Wall Street indices dropped between one and 1.9 per cent on Friday.
The US S&P 500 finished 1.7 per cent down, having tumbled as much as four per cent in early trading, following on from sharp falls in Europe and Asia.
Global rating agency Moody’s Investors Service says it now seems certain that even if the virus is contained, the outbreak will dampen global economic activity well into the June quarter of this year.
The Treasury estimates the virus will cut at least 0.5 percentage points from growth in the March quarter, on top of the 0.2 percentage drag from this summer’s devastating bushfires.