Coronavirus economic impacts have only just begun:

Coronavirus economic impacts have only just begun:
Staff reporterDecember 7, 2020

Experts fear the Reserve Bank of Australia (RBA) will need to take action in the wake of the COVID-19 (coronavirus), according to Finder.

In this month’s Finder RBA Cash Rate Survey™ 20 economists specifically called out the threat the virus poses.

Graham Cooke, insights manager at Finder said, “house prices are still rising in an almost unsubstantiated way, the effect of the smouldering bushfires is still to be felt, and inflation is still sluggish – but it’s the coronavirus above all that is concerning economists right now.

“Specifically, whether the affected countries can keep a lid on the spread of the virus. With COVID-19 now spreading through Europe and the Middle East, that looks unlikely.”

The major fears of the panel centred around education, tourism and property. This follows last week’s news that the Aussie dollar had dipped to 65 US cents, a low-water mark last seen in March 2009.

A budget surplus, as promised by the federal government, now looks unlikely, according to economists.

Nineteen experts (66%) said a surplus was unlikely, with a further two (7%) saying it was very unlikely.

Since the outbreak started to affect Australian markets on Feb 21st, the ASX200 has fallen 10%.

Cooke said COVID-19 fears, along with the uncertainty of the impact of the bushfires, has driven overall economic confidence down amongst the panel to an all-time low of 8% across the five metrics tracked. This is down from a high of 31% in April of 2019.

90% predict a cash rate cut in 2020

Nearly all experts (90%, 35/39) in Finder’s RBA Cash Rate Survey expect an RBA rate cut to happen in 2020, while just 15% (6/39) are predicting a cut on Tuesday.

Cooke said he was surprised to see even 15% of our experts predict a cut this month.

“With the resurgence of the housing market still happening, coronavirus hitting markets hard and general economic figures remaining stagnant, the general consensus is that it’s too turbulent a time to make the call for a rate easing.

“However, all experts, bar four, are predicting that a cut is on the horizon,” Cooke said.

Seven respondents (18%) expect a 0.25% cash rate by the end of the year, and 28 (72%) expect 0.50%.”

April and May are the most likely months for a cut, cited by ten (26%) and nine (23%) experts respectively.

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