Page 16 - IB FEB 2020

Economy Economy

ECONOMY 2020: A ROCKY START

By Samantha Magick Australian universities and other tertiary institutions hail from
China.
The Coronavirus outbreak, the Australian bushfires, The Australian government of Scott Morrison has announced
continuing US-China geopolitical and trade tensions and national bushfire recovery measures, including a A$76 million
damage caused by Tropical Cyclones Tino and Sarai have seen (US$50 million) tourism recovery package aimed at getting
2020 get off to a difficult start in our region. Pair that with holiday-makers travelling across Australia again.
sensitive regional trade negotiations, elections and Brexit, and “Australian tourism is facing its biggest challenge in living
Pacific island countries are looking to downgrade economic memory,” Morrison has said. “One in thirteen Australian jobs
growth projections across the board. rely on tourism and hospitality so our $76 million investment
As we went to press, coronavirus (or COVID-19) diagnoses is an urgent injection to help all those hotels, restaurants and
stood at almost 77,800 globally across 28 countries.There had cafes and tour operators get back on their feet.
been no cases recorded in any Pacific Island nations.
Oxford Economics has projected COVID-19 will cost the Regional responses
global economy over US$1tn (representing a 0.5 per cent fall Despite Australian-government incentives for their people
in global GDP) if it becomes a pandemic and spreads beyond to holiday at home, the ANZ bank says Australians may opt
Asia. The firm’s economic modelling suggests the virus is to visit the Pacific rather than bushfire-affected domestic
already having a “chilling” effect as company after company locations this year.
report amended revenue forecasts as a result of production The region’s tourism industry has been the canary in the
challenges and supply problems. coal mine. Borders are closed to Chinese travellers. Fiji
While Pacific Island nations have significant, and growing Airways has cancelled seven of its 21 flights scheduled for
links with China, it’s the impact of the coronavirus, on top of Hong Kong this month. Cruise ships have been prevented from
the devastating summer 2019/20 bushfires on close neighbour entering American Samoa, Samoa, Vanuatu and Tonga. This
Australia that may have the more significant immediate means on-shore transport providers, cultural and attraction
impact. operators, craftspeople and food vendors have also suffered
Australia’s Reserve Bank says the coronavirus poses a a drop in income. The Samoa Ports Authority says it has
material threat to Australia’s economy. It had already lost some ST$200,000 (US$74,758) in revenue due to the
estimated the bushfires would cut economic growth by 0.2 cancellations.
percentage points in the December and March quarters, The number of Chinese tourists to the region is still
and that drought will cut GDP by a further 0.25 per cent relatively small, around five per cent of all visitors per
throughout this year. Deloitte Access Economics says the annum. They are the largest growing market for many Pacific
coronavirus will cut $1.8 billion from budget revenues this Islands however, with Fiji welcoming around 47,000 visitors
financial year (ending June 2020). from China each year, Vanuatu about 4000 and Samoa around
A drop in iron ore exports (with a flow on effect on tax 2000. The ANZ Bank estimates about 15,000 Chinese visitors
revenues), travel bans hampering visitor arrivals and the may be unable to come to the region as planned due to
impact on the education sector and problems sourcing COVID-19.
supplies from China are all factors. Fiji launches the next phase of its 'Bulanaires' campaign on
Around 1.4 million Chinese tourists visit Australia each year, March 1.It plays on Fiji's rating as the "happiest country in the
and approximate 189,000 or one-third of overseas students at world" in a 2017 Gallup poll and urges visitors to experience

16 Islands Business, February 2020