Market insights: Monitoring the business impacts of COVID-19 on Australia

It started with bushfires raging out of control across 186,000 square kilometres in 2019. Now, the COVID-19 global health crisis is taking its toll on Australia.

On Feb. 27, 2020, the Australian government declared COVID-19 a pandemic even before the World Health Organization and activated its emergency response plan. This allowed authorities to quickly release emergency funding and tax breaks and bought precious time for hospitals to prepare for a potential flood of patients.

But what impact will the deadly virus have on their economy and Canadian companies doing business Down Under? We asked Teresa Nizzola, Export Development Canada’s chief representative for Australia. 

Actually, the list of sectors not impacted by the pandemic would be a much shorter list. Travel and tourism, aviation, and education, and now with social distancing being strictly enforced, the energy and services sectors are badly impacted. Travel and tourism were already badly hit by the bushfires, which began in November 2019.    

In 2019, travel and tourism represented more than 3% of Australia’s gross domestic product (GDP) and contributed CAD$38.75 billion to the national economy. Australia is the seventh-largest international tourism market.  As for education, Australia is the third most popular destination for international students. Earlier this year, more than 100,000 Chinese students weren’t allowed to re-enter Australia after the Christmas and Chinese New Year holidays, as a result of the COVID-19 crisis in Wuhan, China.   

The two sectors of priority are infrastructure—specifically airports—and the energy sector, namely oil and gas, which is receiving a double whammy with the plummeting oil prices. These subsectors already suffered tremendously, and we expect them to continue to be negatively impacted in the short term.

My advice is to be patient. This will pass. Australia’s 29 consecutive years of economic growth will likely come to an end, but Australia is a Top 20 country that performs strongly across a broad range of global measures. Like many countries around the world, we’re focusing on the current emergency at hand. Once that passes, opportunities will present themselves again.

In mid-March, more than 60% of Australian businesses reported being affected by COVID-19, up a massive 45 percentage points from a month ago. Those concerns are expected to heighten as we head into April (see graph below). Companies are bracing themselves for a tough few months. Our winter season will be starting shortly and that means there’ll be higher incidences of the flu, so social distancing will become a set way of life.

I want Canadian companies to know that EDC is here for them during these unprecedented times.  We’re responding to the increasing customer inquiries and making sure our clients’ immediate needs are being heard.  It’s important to stay calm and manage client expectations.

We’ve also shared EDC’s announcement of the new EDC Business Credit Availability Program (BCAP) Guarantee with the local Canadian business community, the larger Global Affairs Canada community in Australia and New Zealand, the Canadian Australian Chamber of Commerce and via personal social media channels.

We’re also making sure Canadian companies know EDC is here to do what we do best. As Canada’s international risk experts, we’re here to offer expert advice, as well as insurance and financial support, to help them get through these challenging times.

To learn how EDC is helping international businesses manage the negative impacts of COVID-19, visit this page.