ECONOMIC FORECASTING – AUSTRALIA

Economic hit outpaces Great Depression

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Original article by Matthew Cranston, Tom McIlroy
The Australian Financial Review – Page: 8 : 29-Apr-20

Treasury officials have told a parliamentary inquiry that Virgin Australia is not the only company that has sought government assistance due to the coronavirus pandemic. Treasury Secretary Steven Kennedy has warned that some businesses will not recover from the crisis. He also said the expected rapid rise in Australia’s unemployment rate will be unprecedented. The jobless rate is forecast to reach 10 per cent in June; Kennedy noted that while unemployment rose much higher during the Great Depression, it did so over several years.

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AUSTRALIA. DEPT OF THE TREASURY, VIRGIN AUSTRALIA HOLDINGS LIMITED – ASX VAH

Virus-plagued NAB seeks $3.5bn

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Original article by Richard Gluyas
The Australian – Page: 13 & 17 : 28-Apr-20

National Australia Bank has posted a 2019-20 interim net profit of $1.3bn, compared with $2.7bn previously. Loan impairments rose to $1.2bn due to a sharp increase in provisions due to the coronavirus, while NAB has reduced its interim dividend from $0.83 per share to just $0.30. NAB shares were suspended from trading on 27 April pending a $3.5bn capital raising, which comprises a $3bn institutional placement and a $500m share purchase plan. Meanwhile, NAB is bearish about the outlook for the economy and unemployment in the near-term.

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NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Panic buying could put GDP in positive territory for March

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Original article by Matthew Cranston, Simon Evans
The Australian Financial Review – Page: 7 : 23-Apr-20

Data from the Australian Bureau of Statistics shows that retail turnover increased by 8.2 per cent in March, driven by panic buying in response to the coronavirus. Sales of canned food, medicinal products and cleaning goods were particularly strong in March, with turnover rising by 50 per cent month-on-month. Josh Williamson of Citigroup warns that retail turnover is likely to fall sharply in April, due to the impact of lockdowns and social distancing rules. David Plank of the ANZ Bank says the sales boost in March could potentially result positive GDP growth for the first quarter of 2020.

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AUSTRALIAN BUREAU OF AGRICULTURAL AND RESOURCE ECONOMICS AND SCIENCES, CITIGROUP PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Tax reform cure for virus fever

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Original article by Patrick Commins
The Australian – Page: 1 & 6 : 22-Apr-20

Reserve Bank of Australia governor Philip Lowe has warned that the nation’s GDP growth will fall by around six per cent in 2020 due to the coronavirus pandemic. However, he says the economy should begin to recover in September, with GDP growth of 6-7 per cent expected in 2021. Lowe also says the unemployment rate could peak at 10 per cent in coming months, and it is likely to remain above six per cent for several years. Lowe adds that total hours worked in Australia are forecast to fall by 20 per cent in the first half of 2020. Lowe has also used a speech in Sydney to argue that industrial relations and tax reform should be considered in the wake of the pandemic.

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RESERVE BANK OF AUSTRALIA

Lowe: Business needs reforms to recover

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Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 2 : 21-Apr-20

Reserve Bank of Australia governor Philip Lowe has warned that the nation is facing a "very significant economic contraction" due to the coronavirus pandemic. He is expected to use a speech on 21 April to call for further policy reform, amid growing concern that business investment will not rebound when the crisis abates. Some economists are also of the view that economic reform will be necessary, arguing that fiscal and monetary stimulus will not be sufficient to boost business investment.

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RESERVE BANK OF AUSTRALIA

Jobless blow will be worst since 1930s

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Original article by David Marin-Guzman
The Australian Financial Review – Page: 9 : 20-Apr-20

A report from the Grattan Institute has forecast that jobs in the hospitality, arts and recreation, retail and education sectors will be hardest hit by the coronavirus and the measures that have been deployed to contain it. The public policy think tank estimates that 14-26 per cent of Australian workers will soon be out of work, or up to 3.4 million people. In addition, the Grattan Institute warns that the JobKeeper scheme will not prevent the unemployment rate from rising to 10-15 per cent.

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GRATTAN INSTITUTE

IMF jumped the gun with dire forecasts: Frydenberg

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Original article by Patrick Commins
The Australian – Page: 4 : 16-Apr-20

Treasurer Josh Frydenberg has downplayed the International Monetary Fund’s latest economic growth and unemployment forecasts for Australia. He argues that they were made prior to pandemic stimulus measures such as the $130bn JobKeeper scheme. New figures show that more than 838,000 businesses have applied for the wage subsidy to date. The IMF has forecast that the domestic economy will contract by 6.7 per cent in 2020, although Alan Oster of National Australia Bank expects GDP growth to fall by just 4.3 per cent.

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AUSTRALIA. DEPT OF THE TREASURY, INTERNATIONAL MONETARY FUND, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Worst year since Great Depression

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 15-Apr-20

The International Monetary Fund has forecast that the Australian economy will contract by 6.7 per cent in 2020 due to the coronavirus lockdown. However, the IMF expects the domestic economy to rebound by 6.1 per cent in 2021, assuming that measures to contain the virus are successful. The IMF’s latest World Economic Outlook also forecasts that global GDP growth will fall by three per cent in 2020, compared with just 0.1 per cent during the global financial crisis. The IMF has warned of the potential for a second wave of the coronavirus if a vaccine is not developed.

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INTERNATIONAL MONETARY FUND

Australia set to emerge with V-shaped recovery

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Original article by Luke Housego
The Australian Financial Review – Page: 30 : 15-Apr-20

Tim Toohey of Yarra Capital forecasts that the majority of developed economies will record a 3-5 per cent decline in GDP growth for 2020. A recent quarterly survey of economists found that the median forecast is for a 3.9 per cent decline in Australia’s GDP growth for the year. Toohey says the domestic economy is likely to experience a V-shaped recovery when it eventually comes. He adds that the "biggest unknown" is just how long the coronavirus lockdown restrictions will remain in place.

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YARRA CAPITAL PARTNERS PTY LTD

Economy to contract almost 4pc in 2020

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Original article by Sarah Turner
The Australian Financial Review – Page: 1 & 23 : 6-Apr-20

The median forecast of economists is that the Australian economy will contract by 3.9 per cent in calendar 2020, and by 1.1 per cent in the year to 30 June. The quarterly survey of economics also shows that the economy is expected to contract by 1.5 per cent in 2020-21, while economic growth is not forecast to rebound from the coronavirus until the end of 2021. Meanwhile, economists generally expect the unemployment rate to peak at 8.5 per cent by the end of June 2020, compared with 5.1 per cent at present. The inflation rate in turn is forecast to be 1.4 per cent in June, falling to 1.25 per cent by the end of the year.

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