The share of businesses affected by coronavirus crisis has quadrupled in four weeks to 60 per cent, amid signs small businesses in NSW and South Australia are among the hardest hit according to the first national survey of businesses since the government released a stimulus package last week.
More than 80 per cent of firms with turnover between $1m and $5m said they were affected by the spread of the virus, according to Roy Morgan Research, a bigger share than for large businesses with turnover over $50m (73 per cent).
Roy Morgan chief executive Michele Levine said the government’s stimulus package “will need to be raised many times over to truly protect the Australian economy from a devastating recession the likes of which Australia hasn’t seen this World War Two”.
“These numbers are even more alarming for particular industries including Manufacturing, Wholesale trade, Recreation & Personal, Information, Media & Telecommunications, Property & Business Services and Transport, Postal & Warehousing. Over 70 per cent of businesses in these industries report being affected by COVID-19 coronavirus,” she added.
The results followed another day of massive losses on local financial markets, including the biggest one day drop in the benchmark S&P/ASX 200 index since 1987 amid escalating fears of a major recession. The Reserve Bank moved to calm markets, injecting liquidity into bonds markets shaken by the rapid escalation of coronavirus infections throughout developed countries.
“When it comes to turnover, over 70 per cent of businesses with a turnover of at least $1m report being affected by the COVID-19 coronavirus – dealing a devastating blow to an economy just starting to recover from the widespread summer bushfires,” Ms Levine said.
The survey of more than 1100 businesses found less than a third of those in Western Australia claimed to be affected, compared to 65 per cent in NSW and 68 per cent in South Australia.
The share of businesses who were affected “a great deal” leapt from 2 per cent in mid-February, when Roy Morgan last asked the questions, to 17 per cent.
The federal government is under pressure to increase the size of its $17.6bn stimulus package it announced last week. Economists worry measures to help small business, including up to $25,000 in rebates for employees’ withholding tax, and revamped asset write-off provisions won’t go far enough to stem job losses.
“The growing prospect of a severe economic slowdown suggests the government will scale up its current economic stimulus program. This scaling up could occur earlier than the May 2020 budget given the speed at which things are moving,” said ANZ’s David Plank on Monday.
The Reserve Bank of Australia said it would reveal further measures to stimulate the economy on Thursday, widely expected to include a cut in the official interest rate to 0.25 per cent and announcement of quantitative easing.
“We expect the RBA to launch full-blown quantitative easing on Thursday. Our baseline assumption is that the Bank will pledge to buy $60bn of government bonds per annum, which is equivalent to 10 per cent of the outstanding stock,” said Marcel Theiliant, an economist at Capital Economics.