Mr Morrison said the government was preparing to help the areas of the economy most at risk from the breakdown of supply chains and the absence of tourists and university students.
“It’s a health crisis, not a financial crisis. But it’s a health crisis with very real economic impacts and the government is extremely mindful of that and we want to be able to get our responses right,” he said.
Some areas, such as Far North Queensland, and industries, such as the West Australian rock lobster sector, are most at risk of major job shedding if the coronavirus continues to spread.
Deloitte Access Economics, which looked at the virus’ impact on the tourism, education and resources sectors, believes it will reduce Australia’s national income by between $5.5 billion and $5.9 billion through the first half of 2020.
In research released on Friday, the company puts the cost to the federal budget at $1.8 billion, but that could grow depending on what the government does and if the economy falters.
Oxford Economics released new virus modelling that forecast the Chinese economy was likely to grow by less than 4 per cent through the early part of this year.
Countries heavily dependent on China, such as Thailand, are expected to have a full percentage point hit to their economies. Nations that rely on machinery out of China for manufacturing, such as India and Brazil, would also be affected.
Senior economist Tom Rogers said Oxford Economics’ estimates were based on an assumption the virus was contained by the end of March or early April.
If not, a pandemic across Asia would see global economic expansion slip to population growth. A world pandemic would see the global economy contract in line with what occurred in 2009.
“This is going to be a problem across Asia and for the rest of the world more generally,” he said.
Analysts have been warning the economy might contract through the March quarter. Figures from the Australian Bureau of Statistics showed business capital spending was already slowing through the final three months of 2019.
Capital expenditure dropped by 2.8 per cent, with spending on buildings and structures falling by 5.9 per cent. Markets had been tipping a much more modest decline for the period, which predates the summer’s fires and the coronavirus outbreak.
The economic impacts of the virus appear to be spreading.
Agricultural banking specialist Rabobank expects demand for Australian beef from China to be well down in the first half of this year.
Australian beef producers lifted production through 2019 as the drought left many unable to maintain their herds. Sales to China jumped by 84 per cent last year and that market now accounts for 24 per cent of Australia’s beef exports.
Rabobank senior animal proteins analyst Angus Gidley-Baird said while it was difficult to fully predict the impact of coronavirus on demand, it was clear sale volumes would be down in the near future.
“Food service and tourism will remain disrupted until the virus is contained, with decreased restaurant sales contributing to weaker beef demand in the first half of the year than in previous years,” he said.
Ratings agency Moody’s said it expected global car sales to slip even further this year. It had been expecting a 0.9 per cent contraction in new vehicle sales in 2020, but because of the virus now thinks this will be closer to 2.5 per cent. Most of this drop will occur through February and March.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra