Colin Brinsden and Marnie Banger
(Australian Associated Press)
Treasurer Josh Frydenberg remains coy on what impact the coronavirus will have on his much-promised surplus, as a global credit rating agency warned the odds of a global pandemic are rising.
Asked outright whether a surplus was still on the cards amid the economic impacts of coronavirus, Mr Frydenberg said people will have to wait until the budget is handed down in May.
“But I do know that this is going to hit the economy, and I do know that our focus has been – in relation to the fires and other shocks that we’ve faced – on getting the support to the community in need,” he told Sky News on Wednesday.
“That’s been our primary focus, not the surplus.”
He told ABC Radio National the government had already notched up an achievement in delivering the first balanced budget in 11 years, at the same time as it rolled out tax cuts.
Financial markets are becoming increasingly nervous about the impact of the virus on the global economy with the Australian stock market shedding a further two per cent at the start of trading – the third consecutive day of losses.
Credit rating agency Moody’s Investors Services said the assumption COVID-19 would be contained to China appeared to be becoming “increasingly tenuous” and the odds of a global pandemic are rising.
It now sees the risk of a pandemic as a 40 per cent chance, double the 20 per cent previously estimated.
“The coronavirus has been a body blow to the Chinese economy, which now threatens to take out the entire global economy,” Moody’s Analytics chief economist Mark Zandi said in a research note.
“A global recession is likely if COVID-19 becomes a pandemic, and the odds of that are uncomfortably high.”
Mr Frydenberg declined to say whether a recession in Australia was on its way, saying: “That’s not the word I would use.”
Even so, he wants to see the December quarter economic growth figures due next week, and the March quarter figures in three month’s time.
He stressed this was just the latest economic shock the Australian economy has faced, following trade tensions between the United States and China, an extended drought, bushfires and floods.
The virus is also a shock beyond our control, he said.
Shadow treasurer Jim Chalmers was unimpressed by Mr Frydenberg’s round of media interviews, joking they “had all the coherence of a Sydney baboon rampage”.
He said Australia’s economic woes pre-dated the bushfires and coronavirus, with weakness in growth, wages and productivity.
“They shouldn’t be pretending that in their seventh year of government, that all this economic weakness that we’ve seen for so long now, is somehow the product of a coronavirus which has hit in recent weeks,” he told reporters.
“This country is crying out for economic leadership and an economic plan, and Scott Morrison is either unwilling or unable to provide either of those things.”