“This is a health crisis but it has various serious economic impacts. They’ve clearly been affecting financial markets,” he said.
“We want to be assured to our cooperation as has occurred through the global financial crisis amongst that group that we can make sure there’s no further damage or undermining of financial markets and the central bank governors and financial ministers are in the best place to do that.”
He made the comments as modelling by KPMG suggests the outbreak will cost the economy the equivalent of 36 million lost work days while delivering a 1.5 per cent hit to productivity.
It estimates the virus will result in the Australian economy will shrink by up to 0.2 per cent or $5 billion by 2027. The global economy will also take a similar-sized hit.
“Our modelling also suggests that if there are no further major surprises about the severity of the pandemic and markets respond in an orderly fashion, then the Australian economy would take the better part of a decade to get close to its pre-COVID-19 trajectory,” it found.
“If the pandemic is more acute and long-lasting and businesses and consumers lose confidence, then markets could be disrupted by irrational behaviour and the economic consequences could be more severe.”
The nation’s supermarkets were inundated by shoppers at the weekend as consumers sought to stock-up on essential goods, ranging from toilet paper to canned tomatoes.
KPMG said this would reduce spending by households on discretionary goods in the short term. Longer term, as households worked through their stock of goods, they would have more money to spend on non-essential items.
AMP Capital chief economist Shane Oliver said the government’s stimulus package was aimed at good areas such as boosting investment and maintaining wages and employment.
“The package won’t stop the virus or the lockdowns – which risk extending into August in Australia given our approaching winter – and so probably won’t stop a recession which runs the risk of extending into the September quarter,” he said.
“But along with monetary easing it may help Australia avoid a second consecutive quarter of contraction in the June quarter and even if it doesn’t it will minimise secondary economic effects.”
The first official data on the impact of the coronavirus, and the summer’s bushfires, will be released on Monday, along with the January international arrival and departure figures.
The figures, which pre-date the official ban on travel by non-citizens from China into Australia, are expected to show a fall in the number of tourists coming to the country. In January last year, 125,000 people came to Australia from China.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.