ECONOMIC FORECASTING – AUSTRALIA

Brace for a record fall in GDP

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Original article by Patrick Commins
The Australian – Page: 4 : 25-Mar-20

JPMorgan economist Ben Jarman expects GDP to fall by 10 per cent in the June quarter due to the coronavirus lockdown measures. The previous largest quarterly decline in GDP was just two per cent in 1974. Jarman also forecasts that the unemployment rate will rise to 11 per cent during the quarter, a view shared by Bill Evans of Westpac. However, Evans expects GDP to fall by just 3.5 per cent in the quarter. Westpac economists have also forecast a Budget deficit of $90bn in 2019-20 due to the federal government’s stimulus measures, and a deficit of $160bn in 2020-21.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC

Jobless rate could hit 13.8pc despite priming of the pump

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Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 23-Mar-20

The federal government and the Reserve Bank have now announced a combined $189bn worth of coronavirus stimulus measures. This includes cash payments for small businesses and non-profit organisations. However, many companies that operate in sectors that employ a lot of people will not be eligible for financial relief. The construction, retail, hospitality, recreation and education are major employers; it is estimated that the unemployment rate would rise from 5.1 per cent to 13.8 per cent if they shed just 25 per cent of their workforce, or about 1.2 million people.

CORPORATES
RESERVE BANK OF AUSTRALIA

Major hit, big job losses ahead: RBA

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Original article by Patrick Commins
The Australian – Page: 4 : 20-Mar-20

Reserve Bank governor Philip Lowe says the unemployment rate can be expected to rise in coming months, as the coronavirus is likely to result in "significant" job losses. However, he says the labour market should rebound quite fast if the virus’s outbreak in Australia can be contained. Lowe also said the virus and measures to combat its spread will have a "severe" impact on the economy, although he is hopeful that this will be temporary. Lowe has indicated that housing market activity is likely to be affected by the pandemic.

CORPORATES
RESERVE BANK OF AUSTRALIA

Virus to shatter weak consumer confidence

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Original article by Elias Visontay
The Australian – Page: 18 : 16-Mar-20

KPMG has stated that the coronavirus could result in an 0.9 per cent hit to the Australian economy in 2020, and that up to 36 million work days could be lost. Simon Bligh, the CEO of data analytics company Ilion, notes that there was a big jump in people falling behind in credit card and mortgage repayments in the lead-up to the virus outbreak, while he suggests that consumer confidence could fall to its lowest point since the global financial crisis as a result of the coronavirus. Bligh contends that the $750 payments being made to low-income earners as part of the federal government’s $17.6 billion stimulus program are a "great initiative".

CORPORATES
KPMG AUSTRALIA PTY LTD, ILION TECHNOLOGY CORPORATION

Bull to bear in three weeks with market down 20pc as Trump leaves the world waiting

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Original article by David Rogers
The Australian – Page: 17 & 27 : 12-Mar-20

The Australian sharemarket is now officially in bear market territory, having shed 20 per cent since reaching a record high of 7,162.5 points just three weeks ago. Some $13bn worth of shares changed hands on 11 March, which is the fifth-highest daily total on record. Richard Coppleson of Bell Potter expects market volatility to persist for at least another month or so. Meanwhile, Josh Williamson of Citigroup now expects Australia to record minus 0.25 per cent GDP growth in the March quarter and zero growth in the June quarter.

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BELL POTTER SECURITIES LIMITED, CITIGROUP PTY LTD

Jobs subsidy plan to bust recession

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Original article by Phillip Coorey, Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 6-Mar-20

Treasury expects the impact of the coronavirus to reduce economic growth by at least 0.5 per cent in the March quarter, while the recent bushfires will cut growth by a further 0.2 per cent. The federal government’s stimulus package will aim to prevent economic growth from also being negative in the June quarter; it will include wage subsidies, a business investment allowance and tax breaks to assist with cash flow. Greens leader Adam Bandt says the stimulus package should also include an increase in unemployment benefits and financial assistance for workers who are not entitled to paid sick leave.

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AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN GREENS, AUSTRALIAN LABOR PARTY

Billions in stimulus to stop slump

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Original article by Phillip Coorey, John Kehoe
The Australian Financial Review – Page: 1 & 6 : 5-Mar-20

Finance Minister Mathias Cormann has warned that the coronavirus will have a "material impact" on Australia’s economic growth in the first half of 2020. Amid growing concern that the nation could go into recession for the first time since 1990-91, the federal government is set to announce a stimulus package that will hit the Budget bottom line. The package will focus on jobs, small business cash flow and capital investment; it is expected to include a business investment allowance that was to have been announced in the May Budget. The stimulus package is likely to result in a deficit for 2019-20.

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AUSTRALIA. DEPT OF FINANCE

Australia most exposed to virus: Trump adviser

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 6 : 2-Mar-20

Kevin Hassett, the former chairman of the White House’s Council of Economic Advisers, has forecast that the Chinese economy will contract by 10 per cent in the March 2020 quarter. He adds that China’s economic growth will return to normal if the coronavirus outbreak is quickly contained, but he warns that Australia faces the prospect of a recession if the outbreak is not brought under control by the start of the northern hemisphere’s summer. The US has introduced new travel restrictions on people who have recently visited Iran, while the nation has reported its first confirmed death from the virus.

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Coronavirus to hit budget and income growth

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Original article by Matthew Cranston
The Australian Financial Review – Page: 5 : 28-Feb-20

Modelling by Deloitte Access Economics suggests that the coronavirus could see growth in national income fall from 6.4 per cent to just two per cent in the first half of 2020. This would have a $5.9bn impact on the domestic economy, with the tourism and education sectors being particularly hard hit. Meanwhile, economists have downgraded their GDP growth forecasts for the December quarter after data showed that there was a 2.8 per cent decline in capital expenditure during the period. Economists had expected growth of 0.5 per cent.

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DELOITTE ACCESS ECONOMICS PTY LTD

Virus, fires: 1.5 million visitors lost

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Original article by Richard Ferguson
The Australian – Page: 1 & 8 : 27-Feb-20

A draft report from Deloitte Access Economics has highlighted the impact of the summer bushfires and the coronavirus outbreak on the Australian economy. The tourism industry is expected to be particularly hard hit, with the number of international visitors forecast to decline by 10-15 per cent in 2020. Adele Labine-Romain of Deloitte Access Economics warns that the coronavirus will have an impact across the economy unless it is contained quickly. Meanwhile, the federal government will shortly decide whether to extend its travel ban on visitors from mainland China; the ban could potentially be extended to countries such as Japan and South Korea.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD