Australia’s economy could take 22 per cent hit from virus shutdown: OECD

SYDNEY, Mar 30, 2020, SMH. A widespread shutdown to slow the spread of the coronavirus pandemic could deliver a 22 per cent blow to the Australian economy with confirmation shoppers have deserted the nation’s main shopping centres, The Sydney Morning Herald reported.

Research by the Paris-based OECD shows all of its member nations will suffer devastating blows to their economies as key sectors are shut down to prevent the spread of coronavirus.

Australia has effectively closed major sections of the economy through restrictions on non-essential outlets and social-distancing measures. It has also barred international travel and forced the real estate sector to hold online auctions.

In the past week, publicly listed companies have stood down at least 150,000 people and hundreds of thousands more have lost work in small and medium-sized firms.

The OECD found in the case of Australia, economic activity would be sliced by 22 per cent once a widespread shutdown was put in place.

The worst-hit nations would be Greece (a 35 per cent hit), Mexico (30 per cent) and Germany (29 per cent) while the least-affected would be Ireland (15 per cent).

Scott Morrison has revealed tighter social distancing restrictions while he and the Treasurer revealed they were working on a third economic stimulus package to deal with the impact of the coronavirus.

The report’s authors noted economies heavily dependent on mining or agriculture suffered the smallest impacts but even at 15 per cent, they were quite significant.

“In all economies, the majority of this impact comes from the hit to output in retail and wholesale trade, and in professional and real estate services,” it found.

“There will also be some variation in the timing of the initial impact on output across economies, reflecting differences in the timing and degree of containment measures. In China, the peak adverse impact on output is already past, with some shutdown measures now being eased.”

The OECD said the shutdowns would have an even bigger impact on consumer spending, finding this could drop by a third in most countries.

For each month a shutdown is in place, a country’s GDP would be cut by 2 percentage points.

Australia’s retail sector is continuing to bear the brunt of the closures aimed at preventing the spread of the coronavirus.

Data released by the ANZ on Monday shows foot traffic across the Melbourne central business district after March 23 is 73 per cent down on last year’s daily average.

This was down on the 38 per cent fall in foot traffic reported the previous week.

Last weekend, traffic was 82 per cent down.

Car usage is also falling, with peak-hour traffic about 24 per cent lower than for the full 2019 average in each capital city.

Weekend traffic has also edged down but not by as much.

ANZ head of Australian economics David Plank said foot and road traffic was likely to bottom out in the coming fortnight before the advent of any more restrictions on movement.

Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.