As the coronavirus outbreak rages on, the economic toll is fast-emerging.
Spawning a wave of employees working from home, self-isolation measures, general anxiety, as well as a variety of government restrictions, the coronavirus has managed to swiftly curtail spending.
“The imposition of social distancing rules and the effective bans – formal and informal, through consumers choosing to stay at home – on travel have had a significant negative impact on activity in a number of service sectors, and we expect to see job losses in these areas in the coming months,” BIS Oxford Economics chief economist Sarah Hunter said in a statement issued to Business Insider Australia.
Some sectors and businesses however are more exposed than others, and are already feeling the pinch.
With some months expected to pass before life resumes as normal, these are the industries doing it tough.
One of the first measures taken by governments around the world was to restrict the flow of people across the world. Some countries like Canada have gone as far as locking down their borders almost entirely.
While Australia hasn’t gone quite as far – yet – it perhaps doesn’t have to, with demand for flights suffering an almost unprecedented plunge.
Australian airlines Qantas, Jetstar and Virgin Australia have suspended all international flights until the end of May and beyond as a consequence, while all have also stripped their domestic schedules right back.
Qantas has gone as far as to stand down around 20,000, or two-thirds, of their entire workforce until further notice, with many forced to take leave, whether paid or otherwise.
The stock price of each has plummeted. On Thursday, Qantas’s stock price was trading at around $2.35, or around 65% lower than it was less than a month ago. Similarly, Virgin Australia’s has more than halved over the same period.
Flight Centre stock price has meanwhile haemorrhaged more than 70%.
Of course, airlines aren’t the only ones being whacked. Sydney Airport has seen its stock price halve, as airports look increasingly deserted and spending in them dries up.
Overseas, plane manufacturer Boeing has lost more than 70% of its stock price as demand for planes crashes as well.
As flights into the country largely cancelled, and those choosing to come in February obliged to self-isolate anyway, Australian tourism is in for a shellacking.
Having already suffered losses (and reputation damage overseas) due to the chaotic bushfire season, it’s yet another blow to an industry doing it tough. Two weeks ago, and before many major restrictions were implemented, a third of visitors were expected to stay home.
That’s now blown right out, with Westpac updating its analysis of the fallout on Wednesday.
“We expect outbound and inbound tourism to contract by 80% over the [first] two quarters,” chief economist Bill Evans said.
— Janine Shepherd AM (@janineshepherd) March 17, 2020
With domestic flights also being cancelled, and people generally choosing to stay home, there’s unlikely to be a boost to domestic tourism in the short-term either. It’s hoped that an anemic Australian dollar might provide a domestic recovery in the second half of the year.
Travel agencies HelloWorld and Sealink have lost more than 70% and 40% of their stock prices respectively.
The lack of visitors is expected to put as much as 10% of Australia’s retail sector at direct risk as well, according to ANZ economists.
Tourism is estimated to make up just over 10% of #retail spending in Australia, so reduced movement into and within Australia is likely to substantially impact the retail sector. Dining out is likely to be hit hardest. @Adelaide__T @DavidPlank12 #ausecon #austourism #ausbiz pic.twitter.com/wkRd9Xl6QJ
— ANZ_Research (@ANZ_Research) March 4, 2020
Combined with the country’s ongoing retail recession, it may be too much for some retailers, with the list of those tipped into administration only expected to grow.
“Retailers have faced an almost perfect storm this summer, with a series of natural disasters, and now the coronavirus and difficult economic conditions now posing the real risk of an economic slump,” Australian Retailers Asscoiation executive director Russell Zimmerman said in a statement welcoming the Federal Government’s $17 billion stimulus package.
The latest retail figures suggest the impact is yet to really show up, with lower spending offset by a significant uptick in grocery shopping, as panic buying takes hold.
From the ABS, "The preliminary figures indicate a rise in food will be slightly offset by falls in industries such as clothing, footwear and personal accessories and other retailing."
— Callam Pickering (@CallamPickering) March 18, 2020
March figures, however, may suffer as the outbreak worsens.
Events, music, weddings, and hospitality
The Australian government on Tuesday restricted all indoor gatherings to a maximum of 100 people – adding to the existing restriction of 500 person gatherings outside.
It leaves the event sector heavily exposed, with the wedding industry already reporting a “crash in enquiries” as well as a slew of cancellations and postponements.
The live music industry meanwhile is reportedly already facing losses in excess of $150 million, as gigs get cancelled last minute, leaving musicians as well as people like music photographers out of work.
Major music festivals around the country including Bluesfest, Splendour in the Grass and Groovin’ the Moo as well as the Sydney Film Festival, the Royal Easter Show, Vivid, Melbourne International Comedy Festival and Dark Mofo have all been either cancelled or postponed until further notice.
In fact, some 65,000 events are said to have been cancelled due to the coronavirus and its various restrictions, leaving hundreds of thousands of jobs at risk, according to peak body Live Performance Australia (LPA).
“Australia’s $4 billion live performance industry is on the brink of collapse without immediate government support,” LPA chief executive Evelyn Richardson said in a statement calling for industry relief.
“Realistically, we’re looking at a 3-6 month closure period at least before any recovery phase. In this scenario, we will have not just thousands of people out of work but major companies going under along with a decimated small to medium sector,” she said, estimating the potential cost at $540 million.
Evidently, the venues that those musicians play at have also had to watch as their patronage disappears, while some major sports events, including the Australian cricket one-day international series against New Zealand, are also being cancelled.
With an over-dependence on international and especially Chinese students, the Australian tertiary education sector is another groaning under the stress of the coronavirus. Chinese students alone are estimated to account for $8 billion of the $39 billion education export market.
The University of Sydney estimates it will lose in the vicinity of $200 million in the first semester alone, Business Insider Australia understands, with other comparable universities in similar positions.
If travel restrictions persist into the second semester, or students opt not to continue their degrees, that black hole in funding could quickly double, and casual university staff could be stood down.
Gyms and health classes
With ‘social distancing’ becoming a hot 2020 trend, overheating in a small confined space with others is quickly losing its attraction.
While coronavirus can’t be transmitted via sweat and Australia’s chief medical officer Dr Brendan Murphy still rates the risk of going to the gym as “low”, people are sure to be concerned.
The virus can live on surfaces such as metal bars and treadmills, and many gyms are expecting memberships to be suspended for periods of up to three months, according to Lifehacker.
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