Optimism around Economic Outlook; Cyber-attacks target Australian firms

Summary

• Australian economy shrank 0.3% in March quarter of 2020, but figures were relatively mild reflecting extraordinary strength of the economy.
• Of late, spending is ramping up; jobs are showing signs of recovery amid a pick-up in consumer confidence as restrictions have started lifting in June.
• Australia has been hit by a massive cyber-attack by a sophisticated, state-based cyber actor with Australian organisations as the target, as per PM Morrison.
• Increased awareness and need for implementation of technical defences, need of the hour to stop the cyber activity.

Australia came out of deadly coronavirus disease much earlier than anticipated, but measures taken to contain the ravaging spread of coronavirus has pushed the economy into its first recession in nearly 3 decades. Coronavirus has caused an end to 29-year journey of economic growth for the country.

COVID-19 has infected 7409 people and has killed 102 people in Australia, as on 19 June 2020. However, numbers are much lower than many of its global counterparts who are still struggling to contain the outbreak.

Let’s have a look at some positive economic indicators that kept some optimism on Australia.

1. Economic growth still better than predicted

As per ABS data released on 3 June, Australian economy shrank by a relatively mild 0.3% in the first 3 months of 2020. The contraction of 0.3% shows the resilience of Australian economy, given that the country went through drought and devastating bushfires impact. Australia’s growth is much more optimistic than most of the other advanced countries.

• Current account surplus stood at $8.4 billion for the March quarter as exports were firm while imports declined; thus, adding to GDP amid coronavirus impact
• Stocking up of groceries like toilet paper boosted retail sales to 8.5% in March, and increased household expenditure on food which kept the figures from falling further
• Government spending also contributed to the economy, and GDP could have shrunk by 0.7% if the government expenditure had been taken away

_{Source: ABS}

Economists say that though the economy is expected to plunge much more in the June quarter, with improved health outcomes and government measures backing households and businesses, the decline in GDP would be much lesser than expected.

2. Retail sales soared in May

The latest preliminary data on retail sales released on 19 June by ABS states that the retail turnover rose 16.3% in May in seasonally adjusted terms. It was the most significant rise in 38 years following the biggest fall of 17.7% in April 2020. There had been significant increases recorded for footwear, clothing, personal accessories as well as food shops as restrictions on trade were relaxed in May. However, sales of cafes, restaurants and takeaways stayed 30% below the level of May 2019.

3. Signs of job recovery

The unemployment rate for May rose to 7.1% shedding 227,000 jobs in May, highest in 19 years. The unemployment rate was moderated by large numbers leaving the workforce as reflected by a fall in the participation rate, which slipped down by 0.7% to 62.9% in May. However, the numbers could have been far higher if JobKeeper and JobSeeker programs were not in place. As the economy has reopened in June, more job gains are anticipated for the month.

_{Source: ABS}

The employment data from SEEK shows that there has been 39.7% growth in job ads month on month, with major ad postings by hospitality and tourism, trades, manufacturing, and transport industries. Further, payroll numbers also increased by 1% in May and rising 0.4% in the last week of the month as businesses reopened.

4. Reviving Consumer Confidence in the economy

Consumer confidence has been reviving since they have begun spending more as restrictions eased. The ANZ Roy Morgan consumer confidence rose 0.5% to 97.5 points in current finances.

David Plank, ANZ head stated that confidence in future financial conditions is now back to early March levels as the persistent lifting of lockdowns has been acting as a positive force for the sentiment.

Australia under cyber-attack

Prime Minister, Scott Morrison disclosed that Australian organisations have come under cyber-attack from a state-based actor. They are being targeted across multiple sectors including all levels of government, critical infrastructure, and essential services. He stated that the activity was not new, but frequency had been increasing over many months.

Australia had been working closely with its allies and partners to manage cyber threats due to rising frequency of cyber-attacks in past several months.

ALSO READ: Cyber-Attacks: How exposed are Australian businesses?

Though there is a growing belief that China might be behind the ongoing cyber-attacks amongst Federal government agencies, PM Morrison emphasised that government will not take the step of naming the state publicly. Mr Morrison stated that continuing and constant cyber threats required providing a firm warning to the government and private sector to be more vigilant and implement technical defences.

As per Council on Foreign Relations, China, Iran, and Russia are the top 3 states alleged to be behind the funding of cyber-attacks. On 19 June, Australian Cyber Security Centre issued advice on the method used in attacks portrayed under banner as ‘copy-paste compromises’ because the cyber attacker had severely duplicated from an open-source code.

Morrison intends to announce a new cybersecurity approach in the months ahead and plans to add more funding to improve defences.