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Consumers reluctant to spend
It’s been a tough start to 2020, with coronavirus and bushfires both shouldering the blame for a sharp decline in consumer travel and education-spending intentions.
Consumers reluctant to spend
It’s been a tough start to 2020, with coronavirus and bushfires both shouldering the blame for a sharp decline in consumer travel and education-spending intentions.
According to the Commonwealth Bank’s chief economist Michael Blythe, both saw further declines in February after dipping in January.
The information comes from the CBA’s Household Spending Intentions series.
“Along with tourism, the education sector is particularly exposed to the negative effects of the coronavirus,” he said.
“That exposure is now showing up as a sharp downgrade to education-spending intentions.”
“The emerging consensus is that the bushfires probably knocked 0.2 percentage points off economic growth over Q4 2019 and Q1 2020, and the virus could take a further 0.5 percentage points out of Q1 2020,” the chief economist considered.
He added that the consensus is also that the sectors most affected by these natural disasters are tourism and international education, with both accounting for 5 per cent of Australia’s GDP.
They also account for 7 per cent of total employment.
In addition, the economist flagged that “retail spending intentions remain at low levels, while health and fitness spending intentions and entertainment spending intentions are both now also weakening”.
Despite the slackening spending intentions, Mr Blythe did note that home buying spending intentions remain “near the top” of the historical range, and motor vehicle-spending intention continues its upward trend.
Want to read more on the economic impacts of coronavirus? Check out nestegg's most up to date information here.
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