An outbreak of coronavirus blow to the economy of Australia

Prime Minister of Australia Scott Morrison said that the blow to the economy of the country from the spread of coronavirus from China is likely to be “significant”, Reuters reported.

According to Morrison, the flash “Wuhan coronavirus” will exert “real pressure on the economy.” Countries imposed widespread restrictions on travel in an attempt to contain the spread of the virus.

“We must be clear about the full scope of the virus and how far it will spread… this is why I believe that scenario analysis is really important, the Prime Minister said. And it’s done now.”

China is the largest trading partner of Australia, it accounts for about a third of its exports. In addition, Chinese tourists and students provide about 0.9 percent of annual GDP.

Many economists have lowered estimates of GDP growth of Australia, referring to the impact of the coronavirus, as well as forest fires in the South-East of the country.

the Australian Economy is already growing at a slow pace due to weak consumption and subdued inflation despite three rate cuts last year.

this week the Reserve Bank of Australia kept rates at a record low of 0.75% per annum.

Economists expect the Central Bank will cut rates to 0.5% at the meeting in April as the economic Outlook is overshadowed by forest fires and fast-spreading coronavirus.

the head of the Reserve Bank of Australia Philip Lowe acknowledged that these factors will have a temporary effect on the growth of the economy, and reiterated that the country will need to maintain low interest rates for an extended period.