Australia is in a recession but we are still a lucky country
A recession is a certainty for Australia’s economy but we still have several reasons to feel fortunate as coronavirus ravages the globe. Here’s why.
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Whether it’s good fortune, good planning or good genes, Australia is handling the coronavirus crisis better than most nations.
Since February I’ve watched us fall from 15th on the COVID-19 global case list to 43rd – an impressive feat.
And it’s not just the health front where Aussies are winning. Financially we are way ahead too.
Yes, we are almost certainly in a recession right now, with a shrinking economy and rising unemployment set to wreak havoc on official statistics to be released in the weeks ahead.
However, we really are a lucky country on the financial front. You won’t feel that way if you’ve lost your job or suffered a sharp fall in income, but our financial safety nets remain relatively sturdy.
And our ability to recover financially should put Australia in one of the strongest positions in the world when we eventually return to normality. Here’s why.
SPLASHING THE CASH
Billions of bucks have been thrown at all parts of the economy including employers, aged care, child care, pensioners, banks and airlines.
The big one is the JobKeeper program, paying $1500 a fortnight to workers who were stood down. This massive program keeps them connected with their employers and costs $130 billion. Now that’s throwing a kitchen sink.
Commsec says almost $340 billion has been pledged by our governments and more may need to be spent in the survival and recovery phase.
NATIONAL DEBT
We hear a lot of grumbling about the size of Australia’s debt and how it will surge this year, but we entered the COVID-19 crisis in better shape debt-wise that many nations.
Economists say public debt as a proportion of our economy before the pandemic was just a quarter of that of the US and other comparable countries.
So even while our government is spending a mountain of cash combating the virus’s impacts, other countries are doing the same – and they started in a worse debt position than we did.
KICKING HEALTH GOALS
Fewer deaths and fewer critically-ill patients means less disruption during the eventual economic recovery.
Countries that have suffered thousands of deaths and tens of thousands of coronavirus cases have a much tougher task rebuilding their cities, social structures and livelihoods among affected citizens.
Winter is coming in Australia and with it the potential for a spike in cases here, but so far we’ve shown that we’re up to the fight.
Australia has just hit 80 deaths from COVID-19. The US is more than 52,000.
BENEFITING FROM THE REBUILD
A finance boffin mate of mine told me last week that Australia is also poised to benefit financially when the world drags itself out of this pandemic.
He says governments everywhere will be trying to restart their broken economies, and a popular way to do that is through spending big on infrastructure projects.
These projects need the iron ore and other raw materials that Australia already produces.
Another tick for the lucky country.
Originally published as Australia is in a recession but we are still a lucky country