Coronavirus could cost Australia $12 billion in exports, amid warnings of recession

China’s coronavirus epidemic could cost Australia an eye-watering amount amid warnings the crisis could trigger a recession.

China’s coronavirus epidemic could cost Australia a whopping $12 billion in exports amid warnings the crisis may trigger a recession.

A new study by Centre for Independent Studies (CIS) adjunct scholar Salvatore Babones found as much as $4 billion could be wiped from minerals exports alone, with the education and tourism sectors to bear the brunt of the fallout.

Australia’s top 10 universities are especially vulnerable, with an analysis by The Australian revealing they stand to lose $1.2 billion in fees from about 65,800 Chinese students who are at risk of cancelling their first semester courses.

The CIS report estimates Australia losing export revenues of between $8 billion and $12 billion, or about 7 per cent of annual total exports to China, even if the epidemic is over by June.

That includes $1.9 billion in tourism, $3.8 billion in education exports and $190 million in passenger travel services.

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“The rapid sustained revenue growth of the last five years gave education service exporters ample opportunities to build reserves in preparation for a sudden downturn, even if they could not predict the precise form or timing of it,” the paper said.

According to the paper, Chinese enrolments at Australian universities have grown six-fold since 2002 to almost 277,000.

Chinese students made up 29 per cent of all international enrolments, including 39 per cent of higher education enrolments.

“The epidemic has hit at the worst possible time from the standpoint of university enrolments; students may miss an ­entire semester while many may never commence them at all,” Prof Babones said.

“Taxpayers are likely to be called on to rescue their universities from the most dire financial consequences of the coronavirus epidemic, and perhaps to rescue many private companies as well.”

However the report found resources exports to China, which were worth $94 billion last year, were more resilient than services.

“Australia’s miners are accustomed to managing risk and have well-developed tools for minimising its effects, such as forward contracts, commodities ­futures and credit insurance. They also tend to hold substantial financial reserves,” Prof Babones said.

Australia’s top 10 universities are especially vulnerable to financial losses from the coronavirus. Picture: University of Sydney

It comes amid fears of a looming recession as the world’s second-largest economy comes to a near standstill.

China’s economy accounts for 16 per cent of the global economy. In the wake of the coronavirus outbreak, oil prices have tumbled, international travel to and from China has drastically fallen and multinational companies have scaled back operations there.

China is already drowning in debt, with the Institute of International Finance saying the rising superpower’s debt topped 300 per cent of GDP in 2019.

Senior fellow at the Brookings Institution Eswar Prasad said coronavirus marks a “moment of serious reckoning for China’s economy”.

“China’s sheer size, along with its roles as an engine of global economic growth and a dominant player in commodity markets, means that a hit to China will have significant ramifications all over the world,” he warned in The New York Times.

He noted that while a global recession is “not yet on the cards”, the “added uncertainty will restrain investment and productivity, which already looked anaemic in all major economies”.