FX.co ★ Coronavirus likely to have significant impact on Australia’s economy

Coronavirus likely to have significant impact on Australia’s economy

According to the geographical location, Australia is situated far away from other countries. However, it has failed to avoid economic impact of the coronavirus. The country’s economy largely depends on exports. A third of all exports comes to China. In fact, China is Australia’s largest trading partner. Moreover, the Chinese tourism and students account for about 0.9% of the nation’s annual economic output. Many economists have already downgraded their estimates for Australia’s economic growth because of the virus. Besides, deadly bushfires that occurred at the beginning of the year had a disruptive influence on the country’s economy. The Reserve Bank of Australia had to cut the key interest rate for the fourth time. The regulator is likely to make the same decision during the upcoming meeting in April. The prediction can be proved by comments made by Reserve Bank Governor Philip Lowe. He said that the country’s economic growth is under threat. “Due to both global and domestic factors, it is reasonable to expect that an extended period of low interest rates will be required in Australia,” Philip Lowe said. Prime Minister Scott Morrison supported the RBA governor’s view. “We need to be clear about the full extent of the virus and how much further it will spread, the success of containment measures in other jurisdictions, that is not known and that’s why I think a scenario analysis is really important,” Morrison said. “And that’s being done now.” He also added that the hit to Australia’s economy from the epidemic is likely to be “significant”.

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