The International Monetary Fund has issued a stern warning to governments across the globe, imploring leaders to enact “wartime policy measures” for economies to survive the looming deep recession.
The call to arms comes as the Australian share market plunged yet again, slumping nearly 3 per cent by midday as the coronavirus pandemic grinds industries to a halt.
The international organisation wants policymakers to pull the trigger on “exceptional support” to help the suddenly unemployed avoid homelessness and deploy industries to produce supplies to properly stock health professionals on the frontline.
It expects the “war” phase of the pandemic to rage for up to six months before entering a “post-war recovery” when the epidemic is brought under control by vaccines but financial pillars will remain battered and bruised.
“The success of the pace of recovery will depend crucially on policies undertaken during the crisis,” IMF economists wrote in a blog post.
“If policies ensure that workers do not lose their jobs, renters and homeowners are not evicted, companies avoid bankruptcy, and business and trade networks are preserved, the recovery will occur sooner and more smoothly.”
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The Washington-based group said the current crisis is unique to other financial downturns because its dramatic weakening isn’t driven by demand but by “unavoidable consequence of measures to limit the spread of the disease”, similar to the disruption of a violent international conflict.
Along with the United Kingdom and Canada, Australia has committed to major investments to support the spluttering economy and struggling workforce including a $130 billion wage subsidy package.
The ASX followed US stocks to record significant losses today after the major economy warned the death toll from the pandemic could be as high as 200,000.
At noon Sydney time, the banks, property and industrial stocks were among the biggest losers as the market followed up Wednesday’s 3.58 per cent rise with a steep decline. Commonwealth Bank shed 4.41 per cent to $60.86 as it announced it will make a one-time payment to all customers who are receiving a home loan deferral because of the coronavirus.
Westpac shares fell 5.03 per cent to $15.86 after revealing it would make Peter King’s interim chief executive appointment a permanent one.
NAB dropped 5.72 per cent to $15.98 and ANZ fell 5.87 per cent to $16.05. Also in banking news this morning, the Reserve Bank of New Zealand announced Australia’s big four banks won’t be able to receive dividends from their Kiwi subsidiaries during the coronavirus pandemic.
Macquarie Group dropped 3.63 per cent to $86.05, while insurers QBE and Suncorp both fell around eight per cent.
Property managers Scentre Group, Stockland, Vicinity Centres, Goodman and GPT Group pared earlier losses, but they were still down between 0.3 per cent and 3.8 per cent at midday.
Toll road manager Transurban shed another four per cent to $11.76. Health giant CSL fell 1.75 per cent to $301.66, while Telstra dropped 2.5 per cent to $3.12.
For the big miners, Rio Tinto lost 2.69 per cent to $86.02 and BHP fell 2.65 per cent to $29.43 as metals prices come under more pressure amid falling demand.
Gold miners Newcrest, Northern Star and Evolution bucked the trend with rises of between 2.5 per cent and five per cent as investors turn to the safe haven precious metal.
Supermarket Woolworths dipped 1.72 per cent to $35.39, but rival Coles provided a rare splash of green on the market with a 1.7 per cent rise to $16.10. For energy stocks, Santos, Origin and Oil Search rose by between 1.12 per cent and 2.4 per cent by noon.
One of the few bright spots on the market was IDP Education with its shares up almost 26 per cent to $14.52 after it announces the successful completion of a $225 million Institutional Placement.
— with AAP