Treasurer Josh Frydenberg has refused to rule out the possibility of a negative quarter as the bushfire emergency and coronavirus outbreak weigh on the weakening economy.
Treasurer Frydenberg appeared on the ABC’s Insiders program to answer a host of questions on the impact the coronavirus and bushfires would have on the Australian economy. But when asked whether the country could see a negative quarter, Treasurer Frydenberg told host Tony Speers, “I’ll leave that for you to commentate on”.
“There are things that we can control and things that we can't control,” Mr Frydenberg said.
“When it comes to the outbreak of the virus, when it comes to the fires, when it comes to the floods. when it comes to the trade tensions between the United States and China, we can't control those factors. But it does underline the importance of our disciplined economic management.”
The comments come as Australia closes its borders to Chinese nationals – a move that will see universities and tourism take a massive hit as thousands of international students are unable to resume their studies.
“Obviously, China is a critical economic partner for us,” Mr Frydenberg said.
“They're the greatest source of foreign students - over 200,000 into Australia, [and] 1.4 million tourists. Together, those two sectors provide about $16 billion to the Australian economy…But it’s too early to give a definite view about the economic impact because we don’t know how severe and how sustained the virus outbreak is.”
The twin crises of the bushfire emergency and the coronavirus outbreak could also endanger the oft-touted surplus, with the government’s commitments to supporting impacted communities likely to significantly reduce the $5 billion surplus forecast in the Mid-Year Economic and Fiscal Outlook.
“In terms of having a balanced budget, that's a significant achievement.” Mr Frydenberg said.
“In terms of a surplus, you'll have to tune in on budget night.”
Economists agree that the Reserve Bank is likely to remain in inflation fighting mode until December. ...