The outbreak of the COVID-19 virus has started in Wuhan, China, and is currently spreading throughout other countries. It affects the nations of the world in many ways. Apart from the obvious impact on people’s health, the virus and the measures against it influence economic developments as well. China is Australia’s largest trading partner, and the two nations have close ties in travel, tourism, and education. This is why COVID-19 will surely affect the Australian economy negatively. In all likelihood, the industries most dependant on China, such as tourism, education, and mineral exports, will experience short-term setbacks, and uncertainty will probably continue for a considerable part of 2020.
The outbreak of COVID-19 will leave a negative impact on the Australian tourism industry. People cancel their trips worldwide because of their fears of the virus. It is estimated that COVID-19 will cost the travel industry $560 billion in 2020, which is one-third of the projected travel spending during the entire year (Josephs). Thus, all countries suffer from this effect. However, Australia will likely feel this impact harder than many other nations. More than 15 percent of 8.66 million visitors arriving in Australia yearly are from China (Choudhury). Moreover, these 15 percents account for as much as 27 percent of the country’s tourism revenue (Choudhury).
Therefore, the travel limitations and border restrictions introduced to counter the spread of the virus will hit the Australian tourism industry harder than most. Additionally, Chinese tourists usually prefer to travel in February due to the Lunar New Year holidays (Choudhury). Since the peak of the outbreak in China was in February and March, COVID-19 hit the Australian tourist industry at the worst time possible. The changing number of buyers leads to a decrease in demand, thus lowering the profits of the Australian tourist industry.
Education will also suffer because of the coronavirus outbreak. As mentioned above, COVID-19 caused the Australian government to enact border restrictions, such as the ban on non-resident foreigners coming to the country. This development affects education since Chinese students constitute the vast majority of international students in Australia. To specify, as much as 60 percent of foreign students in Australian universities are Chinese (Choudhury).
International students are an important source of revenue for the country’s educational institutions. Chinese students also account for as much as 0.6 percent of the country’s GDP (Choudhury). Thus, if their numbers drop, the revenue decreases as well. This reliance on Chinese students is why the effect of the coronavirus outbreak on the international enrolment in Australian educational institutions will be especially strong. The educational exchange will only function as normal when the situation with the COVID-19 is under control in both China and Australia. Unless the virus is swiftly contained in both countries, Australian educational facilities will have lower revenues for the rest of 2020. Additionally, decreased numbers of students will decrease demand nationwide with negative results for the economy.
Apart from the education and the tourism industry, the coronavirus outbreak will harm the Australian exports of raw materials. China is Australia’s largest trading partner and accounts for one-third of the country’s exports (Verrender). Minerals, such as liquefied natural gas, thermal and metallurgical coal, and iron ore, are some of the most important ones (Choudhury). To stop or at least limit the spread of the virus, many Chinese factories closed temporarily to prevent large groups of people from gathering in one place. While this shutdown was probably beneficial for healthcare, it decreased the demand for raw materials in Chinese metallurgy.
As long as the Chinese factories do not work at their full capacity, Australian mineral exports suffer as well. Moreover, even if the virus is contained in China, it still spreads across the entire region. Southeast Asia as a whole accounts for 70 percent of Australian exports, and if other countries introduce similar measures, Australian exports will fall even more (Choudhury). To summarize, the measures taken to limit the spread of coronavirus have a negative impact on industrial production, which, in turn, lowers the demand for Australian raw materials.
As one can see, the coronavirus outbreak will affect the Australian economy negatively. Tourism, education, and mineral exports will suffer the most. Because of the travel limitations and border restrictions introduced to counter the spread of the virus, the Australian tourism industry will lose much of its expected revenue. The same applies to education, as the majority of international students in Australia are Chinese and. Finally, the shutdown of many factories in China lowered the demand for Australian raw materials, thus hitting the mineral exports. Judging on the Chinese experience, these impacts will probably be short-term, but uncertainty promoted by coronavirus will likely affect the Australian economy for the rest of 2020.
Works Cited
Choudhury, Saheli Roy. “Australia’s Growth Outlook Dims as China’s Momentum Falters amid Coronavirus Outbreak.” CNBC. 2020. Web.
Josephs, Leslie. “Coronavirus Is Threatening to End the World Air-Travel Boom.” CNBC. 2020. Web.
Verrender, Ian. “Interest Rate Cuts Could Be on the Way as the Economy Takes a Hit from the Coronavirus outbreak.” ABC News. 2020. Web.