World finance ministers and central bank governors from the 20 leading economies will meet in Saudi Arabia at the weekend.
The coronavirus has been identified as a “global health emergency” that has quickly become the “most pressing uncertainty” for policymakers.
ANZ credit card and merchant data showed a steep drop in airport spending in February, reflecting coronavirus-related travel bans and lower appetite for international travel.
Spending at Brisbane, Melbourne, Perth and Sydney airports dropped 27 per cent from the week ending January 21 to the week ending February 8.
“We expect airport arrivals and tourism spending to remain low, while the travel bans continue and some local residents elect not to travel internationally,” ANZ economists said.
S&P Global Ratings said Australia would be among the biggest losers in the Asia-Pacific from the COVID-19 outbreak in China, as fewer students and tourists travelled here and commodity prices weakened.
S&P slashed Australia’s economic growth forecast by 0.5 of a percentage point to 1.7 per cent for 2020, due to its close links to China’s slowing economy.
“Disruption in China will flow to Asia-Pacific through four channels: people flows, supply chains, goods trade, and commodity prices.”
The IMF said if the coronavirus is contained quickly, the Chinese economy would bounce back soon.
“The result would be a sharp drop in GDP growth in China in the first quarter of 2020, but only a small reduction for the entire year.
“Spillovers to other countries would remain relatively minor and short-lived, mostly through temporary supply chain disruptions, tourism, and travel restrictions.”
However, if the health emergency was long-lasting and morphed into a more serious outbreak, the economic hit will be more damaging.
“Its global impact would be amplified through more substantial supply chain disruptions and a more persistent drop in investor confidence, especially if the epidemic spreads beyond China,” the IMF said.
The Washington-based fund also called for more investments in clean energy and resilient infrastructure to avert future losses.
Carbon tax backing
It also renewed calls for a carbon tax, a policy ruled out by Prime Minister Scott Morrison in favour of investing in technology and climate change adaptation and mitigation.
“For countries and communities at highest risk of climate disasters investing in adaptation is both urgent and cost-effective,” the IMF’s G20 surveillance note said.
“Analysis by the Global Commission on Adaptation suggests the benefits of
such investments could far outweigh their cost.”