The gravity of the Covid-19 outbreak on the world economy has intensified a lot already and does not look like easing in the near term as countries prepare for temporary lockdowns and ban on travellers. Travel, tourism and education sectors are counted amongst the most severely hit ones in the contemporary situation.
In times where the general public is in a state of panic buying of surgical masks, governments world over seem to be pro-active in containing the spread of the virus. Measures on every front are being executed, and people are made to comply with these, willingly or unwillingly.
According to WHO there are around 375 confirmed cases of coronavirus in Australia, including five deaths.
The worrisome situation due to slowdown in the economies across the globe has compelled governments to plan and declare economic stimuli packages for mitigating the impact of the Covid-19 outbreak and support the momentum in the respective economies.
Moreover, the highly volatile markets reflect the anxiety that overrides the confidence, further lowering sentiments of the investors.
The Morrison Government had announced a $17.6 billion economic plan focused on keeping the Australian people employed and assisting small and medium-sized businesses to continue their business while supporting business investments. Moreover, this is expected to provide support for the most severely affected sectors, regions and communities and household stimulus payments that shall benefit the broader economy.
Not only the Australian government but the US government as well as the UK government have announced fiscal stimuli to support their respective people, jobs and businesses during this tough time. With the increasing number of confirmed cases of coronavirus, businesses are experiencing unprecedented situations due to panic amongst the customers and employees.
Lately, the US government announced immediate cash payments of US$1000 to Americans as part of the coronavirus stimulus package to cope with the economic ravages of the Covid-19. With the spread of coronavirus, there is a constant threat that the global economy may be pushed into a recession.
US President, Donald Trump, and Treasury Secretary, Steven Mnuchin, together put forward the proposal to mail checks of an amount up to USD 1000 to Americans in an attempt to quickly inject hundreds of billions of dollars into the US economy at a time when airlines are cutting short flights, restaurants are being shut down, and public places are being deserted.
Similarly, speculations have begun to surface in the market regarding the next fiscal stimulus by the Australian government. It is expected that the Australian government shall soon announce another economic stimulus package as Canberra beefed up efforts to suppress the spread of the Covid-19 which has already claimed five lives in Australia.
Economists across the globe are forecasting a recession, and there are sure shot expectations of decelerated growth in the major economies. Moreover, the deceleration across the globe is expected to negate the growth across sectors and industries, resulting in contracting of the economies.
The back to back packages announced across major economies looks like lacking lustre to lure the investors amidst high volatility in the markets with declining investor confidence. The moment of rejoicing for the investors due to the stimulus package has vanished in the blink of an eye as markets are still struggling to cope with dampening sentiments of retail consumers.
Aviation Package Announced
In response to the unprecedented and likely sustained period of falling of international and domestic air traffic, the Commonwealth Government announced an aviation package for:
- Refunding and ongoing waiving of a range of Government charges on the industry including aviation fuel excise duty
- Airservices charges on domestic airline operations
- Domestic and regional aviation security charges
These measures bear a total estimated cost of $715 million, with an upfront projected benefit of $159 million to Australian airlines for reimbursement of applicable charges paid by domestic airlines since 1 February 2020.
The aviation industry is one most severely hit industries amidst the coronavirus outbreak as travel bans had been imposed since February 2020. Airlines like Qantas Airways Limited (ASX: QAN) are expected to make significant cuts to domestic and international flying schedules.
Moreover, in the freshest event, Virgin Australia Holdings Limited (ASX: VAH) has temporarily suspended most of its international services and has further cut its domestic capacity by around 60% in response to extended travel restrictions by the Australian government and as an adjustment to a significant fall in travel, demand owing to negative impacts from COVID-19 outbreak.
Restrictions on Public Gatherings
The National Cabinet has accepted the extension of restrictions on gatherings advised by the Australian Health Protection Principal Committee (AHPPC), in an attempt to ensure deceleration of the spread of COVID-19 in Australia.
Further, the National Cabinet has also endorsed the measure that Australians can consider travelling only when it is necessary and otherwise should stay at home unless in need of medical care. However, it was decided that outdoor events having less than 500 attendees may proceed, given the general measures that all events are required to abide by.
Owner and operator of leisure businesses across Australia, New Zealand and the United States, Ardent Leisure Group Limited (ASX: ALG) has temporarily closed all of its centres nationwide in the US until the end of March 2020 amidst the current COVID-19 situation in the United States on its Main Event Entertainment centres.
No Anzac Day Celebrations
Citing the high attendance of older Australians at events like Anzac Day where there is an increased risk posed to such individuals, the National Cabinet has called off ceremonies and events for celebrating Anzac Day.
The Cabinet has decided that a small streamed/filmed ceremony involving officials at a state level may be acceptable with no marches given international travel restrictions and restrictions on public gatherings.
Bulk Purchases Highly Discouraged
The world has recently witnessed events of panic buying, especially in Australia, for the purchase of staples, including toilet papers. This has compelled the supermarket operators to implement measures to ensure the availability of the items for a greater number of customers. These measures include the early opening of stores and limiting the number of purchases for certain items per individual.
The event of panic buying has also triggered high ambiguity among the general public, citing which the Australian government highly discourages the act of bulk purchase of food, medicine and other goods.
The National Cabinet endorsed the AHPPC’s advice against the panic purchase of food and other supplies recognising the importance of supply lines to remote communities.
Moreover, the National Security Committee of Cabinet has advised the general public not to travel overseas at this time as the country raised its travel advice setting to Level-4 of 4.
To secure the older Australian population and susceptible communities in times ahead, the Australian government may consider an extension of these restrictions as well as put forward further restrictions on social movements.
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.