How the coronavirus outbreak is affecting Australia’s economy
The coronavirus outbreak is having adverse effects on many Australian industries, but it could provide some welcome news for motorists.
Retailers are bracing for potential product shortages and sales drops as Chinese factories cease operation.
But Commsec Senior Economist Ryan Felsman says the severity of the impact felt by factory shutdowns remains unknown.
“A lot depends on what happens as far as the contagion is concerned in China,” he told 3AW’s Neil Mitchell.
“We are seeing a shutdown of factories which produce toys and a whole host of products, so that could impact the broader supply chain where Australian retailers source their goods and services from.”
It remains unclear whether supply shortages will cause price hikes.
“There’s a potential situation where Australians could start buying goods and services that are Australian made, rather than made in China,” Mr Felsman said.
Australian exporters are also feeling the effects of the coronavirus outbreak.
Exports to China make up 38 per cent of the Australian export market, and the virus has reduced demand for many good and services.
The seafood industry has been left reeling after China put a ban on live seafood trade.
But the weak Australian dollar is providing some relief for exporters.
“The lower value of the Australian dollar against the greenback will provide some support for our exporters and make them more competitive, but a lot of that demand from China at the moment is being reduced on the back of concerns around the coronavirus,” Mr Felsman said.
Meanwhile, the tourism industry is struggling as a result of the China travel ban.
In the last 12 months Chinese tourists spent an estimated $3 billion in Victoria.
But there is some good news for Australian consumers — we could see lower petrol prices as a result of the coronavirus, but the price drop won’t come immediately.
The cheaper prices will come from a fall in the the price of oil, driven by a drop in demand from China, the world’s largest oil importer.
“With the crude oil price down around 18 per cent since the coronavirus contagion took place what we’re expecting to see is the importation of that refined product from Singapore fall,” Mr Felsman said.
“We should see those prices potentially fall in the next few weeks.”
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Image: Kevin Frayer / Stringer