The old saying “A week is a long time in politics” is sure to be replaced, at least temporarily, with “A week is a long time in the COVID-19 world”.
The success of social distancing, a partial shutdown and stay-at-home orders has seen a flattening of the Australian COVID-19 ‘curve’ that’s well ahead of most other countries. The contrast with the global average and other, roughly comparable, countries is heartening.
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In the past seven days (15 – 21 April) there have been 240 new cases in Australia, compared to the 513 new cases in the seven days prior (8 – 14 April).
Some Gold Coast and Sydney beaches have either been partially reopened or will do so next week. Some states are already planning a partial return-to-school next month and the ban on most elective surgery ends this Sunday. Tempering these announcements is the experience of some countries where there has been an increase in deaths subsequent to a period of decline
These pieces of good news are welcome, however (sorry to be a wet blanket, again) but the economic news is still, mostly, dire.
This week we learned that:
- Virgin Australia called in the administrators, putting 16,000 jobs at risk if a new buyer (s) cannot be found. It seems likely that a (much more streamlined) version of the airline will fly again once administrators, Deloitte, review the bids from a range of potential new owners.
- Reserve Bank governor Philip Lowe has warned Australia is this year likely to experience its biggest contraction in national output since the Great Depression, with most of this decline taking place in the current (June) quarter.
- ABS data (drawn from Australian Taxation Office Single Touch Payroll data) suggests that 780,000 people lost their jobs in the three weeks between the 15th of March and the 4th of April. As a reference point, Australia’s most recent official data release (for the survey period ending 13 March) pegged Australia’s total number of unemployed workers actively looking for work at 713,000.
- Young workers took a disproportionate share of the 780,000 job losses. 9.9% of the workforce under the age of 20 and 8.8% of those in the 20-29 age range, lost their job due in large part to the partial or complete closure of businesses in the tourism, sport, arts, food services and hospitality sectors; sectors that employ many young people in casual roles.
- Early research from the UK suggests that there are already concerning mental health issues for many work-from-home employees.
To finish on some good news, this week we also learned that support for many small local businesses had been so strong that a number of these businesses, in areas as diverse as bike shops, fruit & vegetable delivery, online wine sales, takeaway food packaging and furniture & office equipment were experiencing unprecedented demand.
I’ll leave the last word to the Reserve Bank Governor, Dr Lowe:
“We need to remember that once the virus is satisfactorily contained, all those factors that have made Australia such a successful and prosperous country will still be there.”
“One plausible scenario is that the various restrictions begin to be progressively lessened as we get closer to the middle of the year, and are mostly removed by late in the year, except perhaps the restrictions on international travel,” he said.
“Under this scenario, we could expect the economy to begin its bounce-back in the September quarter and for that bounce-back to strengthen from there.”
“If this is how things play out, the economy could be expected to grow very strongly next year, with GDP growth of perhaps 6–7 per cent, after a fall of around 6 per cent this year.