The Australian Government Wants To Put The Economy Into 'Hibernation'


Here's what it means.

To throw in a different analogy, the Federal Government essentially plans on getting the economy into neutral and effectively letting it motor on while minimising the fallout to its most exposed parts – namely, workers and businesses.

“In an ideal world you’d just freeze the economy where it was at March 1, with unemployment at 5.1% and GDP growth at 2.1%, and flick the switch back on when the virus is behind us, but of course we can’t do that,” economist and former Gillard advisor Stephen Koukoulas told Business Insider Australia.

“So the challenge for the government right now is to get through the virus and not emerge on the other side with unemployment in double digits. We already know GDP growth will be negative but we can still keep it from being minus 10% and try to keep it at maybe minus 2% instead. This ‘hibernation’ phase is really just to minimise the downside risk.”

What does hibernation look like for the Australian economy?

It might be about the best Australia can do given the coronavirus uniquely poses twin crises: a health pandemic wrapped up with an economic shutdown.

It’s why the government has moved to keep Australians in work with its ‘JobKeeper’ wage subsidy to businesses and keep those who do lose their jobs afloat financially with the ‘JobSeeker’ allowance.

Even if there is financial pressure, homeowners can defer their mortgage repayments while tenants can rely on a nationwide six-month moratorium to keep a roof over their heads at the very least.

Importantly, all those measures attempt to ensure Australians by and large don’t need to go outside unnecessarily either, to look for work or to move house for example, and thus help minimise further spread of COVID-19.

Hibernation is an economic treatment, not a cure

But the question remains: can a developed economy like Australia’s simply hibernate until the worst is over? Not entirely, according to Koukoulas.

“The fact is we’re not shopping like we used to, we’re not working like we used to, and some businesses aren’t able to open at all. Discretionary spending like on travel, restaurants, weekend excursions is obviously going to dry up, as will spending on things like petrol with people staying put.”

The government shutdown, while protecting Australia from a health standpoint, will undoubtedly then also hurt its economy.

“We’re going to have a recession, it’s unavoidable,” AMP Capital chief economist Shane Oliver told Business Insider Australia. “The government can provide support to workers and businesses but there’s going to be a cost to shutting down the economy, and that will be a bigger economic contraction than anything we’ve seen in the post-war period.”

“The worst contraction we saw in Australia was in the early 80s when the economy shrunk 3.5%. The one we’ll see this year will be at least 12% and it’ll happen a lot faster.”

At this stage, that’s only the base case with the current shutdown in place.

“It’s already started but it’ll only intensify through the June quarter,” Oliver said. “It’s going to have a huge impact on parts of retail, accommodation, tourism, hospitality, property, and some parts of personal services, which together is about 25% of the economy contracting by about half.”

There’s no real alternative

Despite the huge costs, the government’s prescribed cure is likely the best option the country has.

“President Trump wants to reopen the US economy by Easter but that looks like a forlorn hope. The UK is toying with the idea of herd mentality but there’s a whole bunch of problems with that,” Oliver said, noting the enormous number of deaths likely to be produced by such a strategy.

“South Korea seems like it’s done a good job, quarantining people but a lot of countries haven’t been able to emulate their level of success. But our rate of infection has slowed down in the last few days suggesting there’s some evidence it’s working in Australia and holding out the hope we might be able to reopen the economy in a month or two’s time.”

The federal government has more work to do to secure the economy

More importantly, there is work yet to be done to fill in some gaps in ‘Operation: Economic Winter’, namely further clarification and safeguarding of tenants and mortgagees.

“The no evictions policy is ok, but what happens at the end of six months for tenants and landlords? Say you pay $500 per week. At the end of this period, you’ll have $13,000 of unpaid rent. Is that accumulated rent payable at the end of the six-month period or is it written off forever?

“When the government does announce details sometime soon, I’d like to see it pay the rent of people, or even just the first $300 or $400 a week so there’s some financial relief for tenants and landlords, not all of who are rich and many of whom rely on rent to meet their monthly obligations.”

The Morrison government is expected to clarify its position on Wednesday.

Hibernation should help keep Australians employed and businesses afloat. But while the measures won’t insulate the economy entirely, it will help people keep their heads above water.

“Before the government announced its wage subsidy, we were forecasting unemployment to rise to about 15%. Now I’m a little hopeful we can keep it below 10%,” Oliver said.

“The problem will be getting it back down from say 9.5% when the shutdown ends. Businesses are typically cautious in rehiring coming out of a recession and I expect we’ll see the same happen when this is over.”

Under the government’s plans, businesses will also be protected from eviction if they can no longer pay rent, will be able to defer loan repayments for six months, draw on new lines of unsecured credit and in some cases have merchant fees waived and reimbursed.

“It means that if 100,000 businesses would have gone out of business before, now maybe only 25,000 will. That’s actually probably a reasonable outcome given how horrendous the current circumstances are,” Koukoulas said.

This is, of course, the bottom line of the coronavirus, that despite welcome government support there will be some unavoidable pain, no matter how effective the ‘hibernation’ phase may be.

The $200 billion question now is just how long Australia’s hibernation will last.


COVID-19: Kematian Global Terus Meningkat, Terkini Lebih 45,000 Maut

PARIS: Pandemik COVID-19 sudah mengorbankan 45,719 penduduk dunia sejak ia mula tersebar Disember lalu di China, menurut statistik dikeluarkan AFP daripada sumber rasmi hari ini.

Lebih daripada 905,580 kes jangkitan disahkan di 187 negara dan wilayah sejak bermulanya penularan wabak berkenaan.

Bagaimanapun, angka kes jangkitan itu cuma mewakili sebahagian daripada jumlah sebenar memandangkan kebanyakan negara masih melakukan ujian saringan terhad kepada mereka yang memerlukan rawatan lanjut di hospital.

Berdasarkan statistik dikeluarkan dua hari lalu, lebih 4,708 kematian dengan 77,241 kes baharu direkodkan di seluruh dunia.

Negara yang merekodkan kematian terbanyak dalam masa 24 jam lalu adalah Amerika Syarikat (AS) dengan 1,035 disahkan meninggal dunia, diikuti Sepanyol seramai 864 dan Itali (727).

Itali yang merekodkan kes kematian pertama berkaitan COVID-19 di negara itu pada penghujung Februari lalu, setakat ini melaporkan 13,155 kematian dengan kes jangkitan keseluruhan sebanyak 110,574.

Selepas Itali, negara yang turut terjejas teruk berikutan COVID-19 adalah Sepanyol dengan 9,053 kematian daripada kes keseluruhan sebanyak 102,136, AS dengan 4,476 kematian daripada 203,608 kes, Perancis dengan 4,032 kematian daripada 56,989 kes dan China yang angka korbannya mencecah 3,312 daripada 81,554 kes keseluruhan.

Sejak Selasa lalu, negara seperti Congo, Oman, Slovakia, Botswana, Senegal dan El Salvador turut mengumumkan kematian pertama berkaitan dengan COVID-19.

Ketika ini, kes kematian dan jangkitan di kebanyakan negara terus melonjak, antaranya di Eropah merekodkan 33,245 kematian daripada 490,484 kes.

Bagi kes COVID-19 di Amerika Syarikat dan Kanada, angka kematiannya sebanyak 4,587 daripada keseluruhan 213,134 kes.

Di Asia pula sebanyak 3,942 kes kematian dicatatkan daripada keseluruhan 110,570 kes. Manakala di Asia Barat, lebih 3,160 kematian daripada 59,541 jumlah kes jangkitan.

Di Amerika Selatan dan Caribbean angka kematiannya adalah 538 daripada 20,083 kes.

Selain itu, Afrika turut terkesan dengan 223 kematian daripada 6,198 kes, manakalaOceania mengesahkan 24 kematian daripada 5,579 kes berkaitan pandemik COVID-19. 


COVID-19: WHO Bimbang Jumlah Kematian Berganda Dalam Seminggu

GENEVA: Pertubuhan Kesihatan Sedunia (WHO) mendapat kerjasama dari penyelidik seluruh dunia bagi mencari ubat yang berkesan bagi merawat COVID-19.

Tweeter rasmi WHO menyatakan, 74 negara menyertai ujian bagi membandingkan empat jenis ubat dan gabungan beberapa ubat.

“Kami bekerja keras dengan penyelidik seluruh dunia bagi mendapat bukti ubat yang berkesan merawat COVID-19,” katanya.

Dalam ciapan lain, badan itu juga menyatakan mereka mengeluarkan garis panduan baru supaya semua negara menyediakan tempat mencuci tangan di pintu masuk bangunan, pejabat, hentian bas dan stesen kereta api.

Sementara itu, Ketua WHO, Tedros Adhanom Ghebreyesus mengajak warga dunia bersatu melawan COVID-19 kerana jumlah jangkitan hampir mencecah sejuta kes.

Katanya, ada peningkatan mendadak wabak itu dengan jumlah kematian berganda dalamm tempoh seminggu.

“Kita memasuki bulan keempat sejak wabak COVID-19 bermula, saya sangat bimbang dengan kadar jangkitan global,” katanya dalam sidang media virtual.

COVID-19: Perancis catat 509 lagi kematian

PARIS: Perancis mencatatkan angka tertinggi kematian COVID-19 sejak wabak itu bermula dengan 509 disahkan meninggal dunia di hospital, menjadikan jumlah korban keseluruhan kepada 4,032.

Jurucakap Kesihatannya, Jerome Salomon, berkata sehingga kini, 24,369 orang dirawat di hospital dengan 6,017 daripadanya menerima rawatan intensif.

Solomon turut memaklumkan angka kematian pada Selasa lalu meningkat kepada 499 orang.

Angka yang diumumkan itu hanya terhad kepada pesakit COVID-19 yang meninggal dunia di hospital dan tidak termasuk kematian di rumah atau yang berada di rumah orang tua.

Katanya, angka kes baharu turut meningkat daripada 4,861 kes kepada 56,989 orang keseluruhannya.

Bagaimanapun, katanya, masih banyak kes yang tidak didaftarkan disebabkan kekurangan kit saringan.

Solomon menambah, angka bagi pesakit yang menerima rawatan rapi sudah melebihi kapasiti sebelum daripada bermulanya krisis itu, iaitu kira-kira 5,000 orang.

Perancis menguatkuasakan perintah berkurung sejak 17 Mac lalu dalam usaha memperlahan penyebaran wabak itu.

Setakat ini, Perancis mejalankan ujian saringan kepada lebih 30,000 rakyatnya setiap hari, angka ini jauh lebih sedikit berbanding negara jirannya, Jerman. 



Merealisasikan Guru Jauhari Digital, Jadi Aspirasi Negara MADANI

   AI image generated by : Mohd Ezli Mashut Oleh : Mohd Ezli Mashut & ChatGPT Imej Janaan AI Oleh : Mohd Ezli Mashut via Copilot Dalam e...