Asia Minute: Australia Faces Rough Economic Waters
The outbreak of COVID-19 has been global, but its impacts have varied from country to country. One that has received less attention than some others is Australia. But this week there have been several developments showing its economy looks vulnerable.
This week, the International Monetary Fund forecast the global economy will shrink by three percent this year. The IMF says Australia’s economy will be hit more than twice as hard – falling nearly 7% this year.
The reasons start with China — Australia’s largest trade partner.
On Friday, China’s government said the country’s economy shrank by nearly 7% in the first quarter of this year – ending nearly fifty years of continued economic growth.
That’s been a severe blow to Australian exports, while the global market and prices have collapsed for Australia’s leading export: commodities — from iron ore to coal.
Another drag on Australia’s economy, the drop in global travel and tourism. Australia’s government is already predicting unemployment will double later this year to 10%.
Among the sectors suffering — the country’s wine industry. On Thursday, the Australian Broadcasting Corporation quoted the head of the country’s largest wine industry group as saying that nearly a third of the country’s wineries could go bankrupt because of the pandemic.
If you’re looking for a silver lining in the clouds, the IMF says Australia’s economy will be poised to bounce back strongly once conditions improve — possibly showing up as a solid recovery by next year, depending on what happens with the virus.