While GDP figures revealed on Wednesday showed the economy continuing to grow – albeit sluggishly – prior to the bushfire emergency and coronavirus crisis, it’s unlikely those events won’t have an impact as the situation drags on.
“Given the high degree of uncertainty surrounding the economic impacts of COVID-19, Treasury is assessing the situation on an ongoing basis,” Treasury secretary Dr Steven Kennedy told the Senate economics legislation committee on Thursday.
“At this stage we expect the virus to detract at least a half of a percentage point from growth in the March quarter 2020.”
Mr Kennedy said that there was “a range of possible scenarios beyond the March quarter” and that the June quarter would also be affected, adding that the impact of COVID-19 will be “deeper, wider and longer” than that of SARs.
The comments come as the federal government prepares to unveil a virus stimulus for business and sectors that have already been hit hard by the bushfire emergency through late 2019 and early 2020.
While the contents of that stimulus are still up in the air, Treasurer Frydenberg has said that it will run “into the billions of dollars” and sketched out some of the possible measures.
“As for an investment allowance, this is obviously under very serious consideration,” Treasurer Frydenberg told reporters on Wednesday.
“This is something that the business community has asked for, and if you look abroad, some other countries have put in place fiscal responses which include support for business and investment.”
And despite the fact that Prime Minister Scott Morrison poured cold water on possible infrastructure spending due to supply chain impacts, Treasurer Frydenberg has also indicated that some infrastructure projects could be brought forward to immediate starts as part of the stimulus.
“We want Australian businesses to get the support through this economic shock,” Mr Frydenberg told reporters.
“But when we are over this economic shock, we want the Australian economy to be stronger.”
