“While the bushfires and coronavirus mainly pose a short-term threat to growth, a full recovery will likely take longer than the RBA is assuming,” AMP Capital chief economist Shane Oliver said in a note to clients on Saturday.
He expects growth to remain closer to 2 per cent this year.
St George Economics economist Nelson Aston expects the Reserve Bank will need to provide further stimulus and cut the cash rate again in coming months “given the current uncertainties”.
Tourism and Transport Forum chief executive Margy Osmond said locking out Chinese tourists to Australia to prevent the spread of the coronavirus will have a “very significant impact”.
She said there are 1.4 million Chinese visitors each year, spending about $12 billion.
“It’s not just the immediate loss of revenue … it’s those businesses that specialise in dealing with Chinese visitors, which are quite often small,” Ms Osmond told ABC television.
“They may very well not survive the next few months without any cash flow.”
The assessments were further bad news for Treasurer Josh Frydenberg, who has already seen his much-promised 2019-20 budget surplus dwindling away from the government’s response to the bushfires and the coronavirus outbreak.
For the 2019-20 financial year, the Reserve Bank
is forecasting economic growth of 2 per cent rather than the 2.25 per cent forecast by the treasurer in his mid-year budget update, released in December.
That update also saw the surplus for 2019-20 cut to $5 billion from a previous forecast of $7.1 billion, even before the devastation from the bushfires played out.
However, Mr Frydenberg rejected “speculation” in a Weekend Australian article that he was imposing an annual $1.4 billion tax rise on the gas industry to replace falling revenue and protect future surpluses.
“The review referred to was announced in November 2018 and will not be back to government until after this year’s budget,” Mr Frydenberg said in tweets responding to the article. “Therefore speculation is wrong.”
Labor frontbencher Mark Butler said the economy was already faltering before the coronavirus and bushfires.
He said the government’s boast of a budget surplus was “pretty ambitious”, given the constant downgrade to economic growth and wages.
“What is clear is that Australians need a plan to get the economy going,” Mr Butler told reporters in Adelaide.