When the COVID-19 outbreak was emerging as a true threat to Australia, the political narrative from Prime Minister Scott Morrison was that we were facing a health crisis, not a financial crisis. Of highest concern to the govt was the potential price and therefore the capacity of the health system, but the economic impact was also weighing heavily on their minds. it had been a time when flattening the curve was an ambition, not a reality.
Fast forward to today and it is a very different story. Australia has done exceptionally well on the pandemic front: just 12 new infections Australia-wide were reported on Sunday. But the financials of the economy are dire, with alarming figures only now beginning to surface. Any thought that the economy will quickly recover , now that the worst of the health crisis is hopefully over, is extremely much within the camp of illusion .
On Friday, the Federal Reserve Bank of Australia put the detail to the devastation. Unemployment will hit 10 per cent by next month and is predicted to remain above 8 per cent for a few time. Wallets are shut tight: household spending has headed south by 15 per cent. Housing investment is looking worse, down by 17 per cent. All this adds up to an economy shrinking by 8 per cent within the year to June and a record deficit that’s expected to hit an eye-watering $130 billion.
Australia is few lone soldier on the economic front. Only 51 per cent of yank adults are in work. quite 20 million jobs were lost last month alone, variety many multiples worse than anything encountered since the good Depression. the ecu Union’s economy is in retreat by quite 7 per cent this year, the worst downgrade in its history. China, the third centre of gravity for the planet economy, also faces some lean times despite being first to kickstart its economy. Add within the remainder of the planet , and therefore the IMF has the worldwide economy going backwards by 3 per cent.
While such economic gloom is forcing most countries to recast their record books, Australia should be during a better position than most. US President Donald Trump is urging state governors to urge people back to figure whilst the amount of COVID-19 infections is on the rise in many parts of the country and therefore the death rate remains hovering around 2000 each day . Millions are going back to figure in Italy despite a daily death rate of about 200. the danger of its having to reverse course is immense.
The curve’s being in check in Australia and medical care doctors saying Australian hospitals can safely deal with any surge of coronavirus cases sparked by the reopening of the economy and easing of restrictions will hopefully rule out such worst-case scenarios.
But there are some hard yards ahead. While stage 3 lockdown has lasted just for weeks, the ripple effect will touch people’s lives for years. Such factors because the birth rate, which is predicted to drop as people have fewer children during tough economic times, and an expected drop by the amount of migrants coming to Australia, will put an extra drag on the economy.
Fingers crossed, the worst of the COVID-19 outbreak is over. Such a best-case scenario would allow governments to completely confront the economic wreckage wrought by the pandemic. For while it had been always clear this was a health crisis, it’s now very clear it’s also an immense financial crisis.