The Reserve Bank is reluctant to speculate how deeply the coronavirus will hurt Australia’s growth beyond the March quarter, but accepts the wider global economy will be materially weaker.
Deputy Governor Guy Debelle on Wednesday reiterated the central bank’s expectation that the virus will deliver a 0.5 per cent hit to GDP via the education and tourism sectors alone in the three months to March, but the rapidly evolving nature of the outbreak meant a mid-term outlook was hard quantify.
“Clearly we are still only in the early weeks of March, so the picture can change from here,” he told the Australian Financial Review Business Summit in Sydney.
“It is just too uncertain to assess the impact of the virus beyond the March quarter.”
Mr Debelle said the bank’s business liaison program was gathering information on supply-chain disruptions to the construction and retail sectors, but the picture remained unclear.
He said coal consumption and traffic congestion indexes in China showed that the Chinese economy was only now gradually returning to normal.
“Even as this occurs, it is very uncertain how long it will take to repair the severe disruption to supply chains,” Mr Debelle said.
In the meantime, the virus has spread to other countries.
“They too are beginning to suffer significant disruptions, the extent and duration of which is unknown at this time. The conclusion is that the global economy will be materially weaker in the first quarter of 2020 and in the period ahead.”