Australian Economic Outlook in 2020 due to disasters and epidemics & Future Predictions

Natural disasters and epidemics are affecting at least two-thirds of the Australian economy, of which small and medium enterprises are the most affected.

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According to new data released by the Australian government, the country's economy, while still not recovering from the wildfire disaster and prolonged drought last year, is now still suffering from the impact of the Covid-19 epidemic. Natural disasters and epidemics are affecting at least two-thirds of the economy, of which small and medium-sized businesses are the worst hit.

According to data released by the Australian Bureau of Statistics on April 7, two-thirds of the country's businesses operating in the hospitality and tourism sectors have been heavily affected by the Covid-19 epidemic and more 40% of businesses in these two sectors have to lay off or leave their employees without pay.

Survey-based statistics for 3,000 companies also show that SMEs are suffering even more when 50% of them have to cut hours, shift employees or temporary leave for employees without pay.

Providing information to the press on April 8, Mr. Michael Sukkar, Assistant to the Australian Treasury Secretary, said that up to now, more than 700,000 businesses of this country have registered to access the economic bailout package of 130 billion AUD. Government to be able to maintain the company's operations and continue to keep jobs for workers.

According to a recent Westpac Bank assessment, the epidemic could cause Australia's GDP to lose 8.5% in the second quarter, 0.6% in the third quarter and 5% for the whole year. Westpac also forecasts that the unemployment rate in Australia will reach 17% in the second quarter and about 9% by the end of this year. New South Wales and Victoria will suffer the most, as their revenues depend on tourism and international students.

From the previous day, the Australian Central Bank pledged to keep interest rates at a record low of 0.25% until the economy made progress in response to the gloomy economic scenario, employment and inflation targets. This decision was made when recruitment demand in March fell to its lowest level in more than a decade and economists believe that the Australian economy is entering the worst recession in world history.

Future Forecast

How will Australia react to the economic downturn? It is hard to predict. More than half of the adult population were not born or lived in Australia since Australia was experiencing its last recession.

The key question is how long does it take for unemployment to drop and the economy to return to normal. More than ever, the answers to these questions will depend on the decisions of Australian policymakers on five outstanding issues.

Australia needs new sources of growth, especially in terms of productivity, wages and investment weaknesses before the COVID-19 pandemic. The government's tax cut proposal is ambitious and a poor stimulus. Those recommendations target those most affected by COVID-19.

They will aggravate inequality, much of which is not being spent, and will exacerbate the challenges that low growth, low inflation and low investment are causing to the economy. Combining them with ambitious structural reforms is an opportunity to make difficult reforms more bearable for Australians. Failure to do so is to miss an opportunity.

Again, what happens next in Australia's economy will depend on the decisions made by policymakers in each sector. If the government chooses a more closed Australia and a more anti-China Australia and chooses to withdraw stimulus in a false attempt to reduce debt and deficits, or avoid reform when the RBA "dodges" responsibility in pushing up inflation, the outlook would be dire.

Persistently high unemployment and stagnant living standards wait. But if the government builds on international openness that has laid the foundations for Australia's prosperity, sticking more deeply with Asia, better manage relations with China, maintain fiscal policy and the currency widens until the unemployment rate falls while the bold reforms that drive long-term growth are implemented, Australia will once again become the "miracle economy".

History has repeatedly shown that economic extremes, if left over, become political extremes. There is not much time to waste.

#Oceania #AustralianEconomic #FuturePrediction #Covid19

References

https://www.theguardian.com/business/2020/sep/02/australias-economy-was-already-weak-and-the-coronavirus-pandemic-has-belted-it-into-recession

https://www.rba.gov.au/publications/smp/2020/may/economic-outlook.html#:~:text=The%20Australian%20economy%20is%20expected,cent%20in%20the%20June%20quarter.

https://www.intheblack.com/articles/2020/07/23/australias-economic-outlook-is-a-mixed-bag

http://www.baodongnai.com.vn/dong-nai-cuoi-tuan/202008/tuong-trinh-tu-nuoc-uc-tinh-trang-tham-hoa-vi-covid-19-3016439/

Van Anh Nguyen