The possible economic consequences of a coronavirus pandemic
How will industries and households respond when subjected to a ‘shock’ to the normal order of activities – like the Coronavirus.
The Australia Matters campaign last year identified key issues that should be top of mind for business leaders; The economic reality check every business must take showcased how Australia’s economic growth remains persistently lower than at any point in the past two decades. The forecast was predicted to fall even further due to a perfect storm of falling household incomes, wage stagnation, and stalling productivity.
Now a new threat has arisen with the expanding economic consequences of the Coronavirus (COVID-19). New PwC modeling shows that a pandemic could generate negative economic outcomes in all countries and regions on the basis that the Coronavirus lowers both output and productivity.
We estimate that, over a year, Australia’s GDP could fall by A$34.2 billion, or 1.3%. To put this in context, at the peak of the GFC global GDP declined by 5.2%.
Similarly, household consumption, which is a better measure of community welfare, is projected to decline by A$37.9 billion over the forecast year.
This new economic stagnation presents business and government leaders with a possible future of economic contraction in the short term.