The fires alone are tipped to have cut growth by 0.2 percentage points while the virus could slice economic activity by up to half a percentage point with the tourism, education and retail sectors most at risk.
ANZ economists on Wednesday reported that spending in the nation’s major airports in Sydney, Perth, Brisbane and Melbourne dropped 27 per cent between January 21 and the week ending February 8 on the back of travel bans from China.
But KPMG chief economist Brendan Rynne said although there were substantial structural issues facing the Australian economy, the extra day of the leap year may save the Morrison government from a negative quarter.
KPMG chief economist Brendan Rynne says just the extra day of a leap year will be worth $5.2 billion in economic output for the national accounts.Credit:Chris Pearce
Daily GDP since the start of 2018 has averaged almost $5.2 billion. Over the same period, each quarter has seen the economy grow by an average $2.5 billion.
Dr Rynne said the combined economic output of February 29 plus the “normal momentum” of GDP through a quarter was worth $7.2 billion.
He said the areas most exposed to the fires and coronavirus, such as accommodation, education, restaurants and air transport, accounted for 13 per cent of GDP, making it very difficult for these to eradicate the impact of the quarter’s extra day.
“While speculation about negative growth is understandable, the impact of the Gregorian calendar on our national accounts statistical framework means it is less likely to occur,” he said.
“This technical outcome will not change the experiences of households and businesses in the current economic environment – the economy feels weak because it is weak.”
The last time a March quarter in a leap year registered negative growth was in 1972, and even that was affected by a string of one-off factors. Growth then bounced back strongly in the June quarter.
Unusual events such as a leap year are not seasonally adjusted by the Australian Bureau of Statistics. So instead of the normal March quarter containing 90 days, this year’s will include 91.
Dr Rynne’s analysis comes as Labor’s shadow treasurer, Jim Chalmers, signalled an overhaul of the party’s economic policy agenda.
In a speech in Brisbane on Wednesday, Dr Chalmers said Australians should get an annual update on the nation’s wellbeing that would sit alongside the federal budget.
A “wellbeing budget”, similar to that introduced by New Zealand’s government to track issues such as child poverty and the environment, would be used to give people a broader view of the economy and its performance.
Dr Chalmers said a narrow measure of the economy could lead governments into making poor policy decisions.
“Traditional measures have a place, but don’t paint the whole picture. We can do more to measure what matters,” he said.
Dr Chalmers also revealed he believed in an overhaul of the intergenerational report, a five-yearly review of the long term pressures facing the budget, plus the annual Treasury report of the costs of the nation’s tax loopholes and concessions.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
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