Australia’s central bank and government announced support packages on Thursday that will pump around A$100 billion ($56 billion) into the economy, as they seek to cushion the blow from the global coronavirus epidemic.
The Reserve Bank of Australia slashed interest rates in an out-of-cycle cut to an all time low and embarked on a quantitative easing programme for the first time, while the government unveiled A$15 billion in loan support for small and medium lenders.
Australian authorities have been ramping up their financial response to the coronavirus outbreak amid fears it will tip the country into its first recession in nearly three decades and lead to a surge in unemployment.
“A priority for the Reserve Bank is to support jobs, incomes and businesses, so that when the health crisis recedes, the country is well placed to recover strongly,” the RBA said in a statement.
Australia has recorded around 600 coronavirus infections and six deaths, a relatively small number compared to other countries, but officials are growing increasingly concerned about the prospect of an exponential rise in cases.
The RBA, which has been pumping money into the system throughout the week to ensure business and households have access to credit, cut rates to a record low of 0.25%. It also announced a A$90 billion lending package for banks.
Bank regulator, the Australian Prudential Regulation Authority, said it would relax rules about how much cash the country’s banks were required to keep on hand so that they could participate in the central bank’s loan programme.
The government’s package for small and medium businesses adds to a A$17.6 billion announced earlier this month.
Australian Prime Minister Scott Morrison on Wednesday declared a “human biosecurity emergency”, effectively banning all international travel, limiting indoor gatherings to 100 people and restricting entry to aged care facilities.
Widening restrictions on global travel and domestic movement led Qantas Airways Ltd on Thursday to put 20,000 employees on leave until at least the end of May as it suspended all international flights and slashed domestic services by almost two-thirds.
Qantas said it is in talks with grocer Woolworths Group Ltd (WOW.AX) about redeploying some of its workers as supermarkets struggle to contend with an influx of shoppers rushing to purchase goods ahead of any broader domestic shutdown, which has so far been resisted by Morrison.
Supermarket shelves are stripped daily of essentials, including milk, pasta, meat and toilet paper, perpetuating panic buying that Morrison has labeled “ridiculous and un-Australian.”
Economists, however, said any Qantas to Woolworths migration will do little to offset an expected rapid rise in unemployment.
Westpac chief economist Bill Evans has forecast the jobless rate to reach 7% by October, up from 5.3% last month.
The small island state of Tasmania on Thursday imposed its own state of emergency, becoming the first region within Australia’s borders to do so, ordering people who arrive from mainland Australia to self-isolate for 14 days.
Neighboring New Zealand, which has reported 28 infections and no deaths, on Thursday followed Australia’s lead and told its citizens not to travel internationally.
Small Pacific islands, meanwhile, have reported nine confirmed cases of the virus. Most of the island nations, however, do not have the ability to screen for the virus, raising concerns its spread in the region is being masked.