Already battling with a slowed economy following the bushfire catastrophe, Australian retailers are set to be impacted further as the first case of human to human transmission of Coronavirus is reported in Sydney.
The news comes as the government gathers in Canberra to discuss an economic response to the virus. With the first human-to-human case reported on Australian shores, the Attorney General suggests people suspected of carrying COVID-19 (coronavirus) could be detained under biosecurity laws.
How will the government respond?
The tourism and education sectors have already been hit hard by the impact of the virus which was first detected in Wuhan province in China. To date, there are more than 80,000 reported instances of infection in China. The good news is, of those, 44 per cent have already recovered, although 2912 have died of the illness (around 3 per cent). While the virus is yet to be classified a pandemic (WHO is calling it an international health emergency) the impact on the Australian economy is set to continue as the government tightens restrictions and begins the enactment of its emergency health response.
Many small business owners who maintain partnerships with Chinese suppliers are already feeling the brunt of the impact with delayed shipments affecting product supplies. China is also a critical economic partner of Australia and our largest inbound market. 1.45 million Chinese visit Australia annually and spend an estimated $12.3 billion per year. With global travel restricted, the impacts could be far-reaching.
Retailers call for consumer support
Retailers are understandably running scared. However, the National Retail Association (NRA) is urging calm and suggests health precautions should be a business’s first port of call.
Dominique Lamb, CEO of the NRA commented: “Although there has only been a handful of cases in Australia, given the severity of the illness it’s still important to be pro-active in dealing with any staff member whose well-being you are concerned about. Any Australian who has recently been to China would no doubt have been quarantined already, but if you or an employee travelled through China in recent months, it’s wise to still visit a medical professional even if no symptoms are being displayed.”
For retailers wanting more information, the NRA have compiled a fact sheet on its website.
Meanwhile, Shopping Centre News (SCN) reports retail trade at food outlets are down significantly across Chinese hotspots such as Chatswood, Burwood and Chinatown, as consumers fear contracting coronavirus.
Laurence Brown of CRS Pty Ltd told SCN the virus is having a significant impact on the sector with trade down by between 50-90 per cent.
“Sydney City food courts are also feeling the lack of business with my retailers telling me that they are trading down some 50 per cent” he said.
According to Brown, all of businesses have worked tirelessly for many many years to ensure the growth of a chain, and currently these businesses will not be able to exist in the short term.
“This may kill many of our favourite restaurants in the very short term,” he said.
While Australians are being urged to continue to support their local Chinese eatery, Brown suggests it is the Asian customers, who often make up a restaurant’s main clientele that are boycotting restaurants, scared of contracting the virus.
“The most important aspect of life for Chinese people is health. Without health there is no life. In the current situation, yes we can wear a mask and try not to spend too much time on the street or in busy areas, however to remove the mask and eat at a restaurant it’s a ‘no go’,” said Brown.
Given the catastrophic impact the coronavirus could have on small business, lobby groups are already calling for the government to provide assistance, much like they did to those affected by the recent bushfires.
Lobbyists call for government assistance
Peter Strong CEO of the Council of Small Business Organisations of Australia says the government needs to act now in response to the economic impact of coronavirus.
“We must provide assistance to millions of Australia’s small businesses and their 4.5 million employees,” says Strong.
Strong suggests this is particularly vital if the government were to put in place restrictions on citizens’ movements.
“These businesses will be impacted, for example, by any decision to restrict the movement of Australian citizens to minimise transmission of the virus. Many businesses have already been impacted by restrictions on imports and exports to and from COVID-19 affected countries. Other countries that have imposed movement restrictions on their citizens have put in place financial assistance programmes for small businesses.”
Meanwhile in parliament
In Canberra today Prime Minister Scott Morrison suggested a stimulus package could be on the cards to support businesses through the coronavirus crisis.
“The Treasury is working closely together with the other relevant agencies of government to address the boost that we believe will be necessary, which I will have more to say about once we have worked through the details of that plan,” Morrison said.
“It will be a targeted plan. It will be a measured plan. It will be a scalable plan. It will be targeted on the real diagnosis of the economic issue we are looking to confront here.
“We will ensure that we do not make the same mistakes of previous stimulus measures that have been put in place.
“There is a lot of learning from what happened last time and it is important that as the business sector bounces back, as it will, on the other side of this, this is why this health crisis with economic, significant economic implications, is different from a global financial crisis.”
Stop stockpiling toilet paper
The prime minister has also urged calm following reports that people have been stockpiling supplies such as toilet paper and canned goods in response to coronavirus concerns.
“Australians should continue to go about their lives and our normal way and just exercise common sense,” said Morrison.
“I spoke to Coles and Woollies on the way in. They would send the same message I am sending you today: it is important that people just go about their business and their normal processes in a calm manner. They have spoken to me about the arrangements they have in place around their supply lines and things like this, but I would just urge people to be going about their business in the normal way when it comes to those matters.”
Australia is now one of 75 countries impacted by the virus. The PM said with more Australian cases confirmed, it is likely the government will reassess border control and security around people travelling from or through high-risk nations.
What about the banks?
While a rate cut has not yet been promised*, the PM has hinted that one could be in the wings. He has called for the big four banks to follow suit and pass on cuts to customers.
“There is no doubt that if the reserve bank were to take a decision today on cash rates that the government would absolutely expect the four big banks to come to the table and to do their bit in supporting Australians as we go through the impact of the coronavirus,” Morrison said.]
UPDATE
*The RBA has just cut the cash rate by .25 per cent.
More to come.
** The RBA has cut rates by .25 per cent take the cash rate to a historic low of .5 per cent. The RBA released the following statement.
“The Board took this decision to support the economy as it responds to the global coronavirus outbreak,” the RBA said in a statement.
“The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower than earlier expected.
“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end. It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.
“Policy measures have been announced in several countries, including China, which will help support growth. Inflation remains low almost everywhere and unemployment rates are at multi-decade lows in many countries.”
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