In many ways, in Australia and New Zealand at least, our initial insights into the COVID-19 (Coronavirus) pandemic was concern pertaining to what the financial impact was going to be. While we all expected the virus to hit our respective shores, we probably weren’t ready for the magnitude with which it hit. The health pandemic and its voracity within the Australian and New Zealand populace caught most of us by surprise. Even in the early stages, global economic impact seemed inevitable as most people knew supply chains were going to be impacted and global growth significantly subdued. What we didn’t expect was the sudden jolt to our local economies and the subsequent contagion, both in economic and real terms, through our society. This is where the impact moved quickly from theoretical to real.

A combination of a health crisis and an economic crisis is what is now confronting most countries around the world. From a health perspective, what is extremely positive to see is how our local societies, for the most part, are trying to restrict contact among people so that the ‘curve can be flattened’. Governments are doing their best in uncertain times, trying to reassure people that ‘this will pass’ while offering a myriad of financial stimulus packages to those they believe are impacted. I encourage all businesses, if they have been impacted, to consult with their financial advisor for assistance and advice as to how to gain access to government assistance. What is required is that the government assistance money reaches those in need of it. It helps the most vulnerable and rebalances our economies. This very act ensures the downturn is less severe, which is a fundamental role of fiscal policy during times like this. Thus, communication regarding any concerns you have is critical. Talking to family, friends and your advisors is important for your mental and financial wellbeing. For those of us in the services industry it is imperative that we keep talking with our clients to ensure we are providing the right guidance to our clients in a timely manner so that those in need can get the financial assistance and guidance they require.

In many ways it is too early to tell for sure what the local or global impact is from a broader employment or economic growth perspective. What we know is that the impact will be very significant. From an overall economic perspective, two key statistics strike me. It is envisaged that unemployment will move from record lows to over 10 per cent in the short term. That is unprecedented levels for many in the workforce. Economic growth, the other key statistic for me, is anticipated to drop by at least 10 per cent in the June quarter, possibly more. Substantially, the move to 10 per cent unemployment and the significant drop in growth has occurred extremely quickly. The speed in which these key statistics will move is the shock factor which people need to brace themselves for.

Of particular note here is that some key industries in particular are bearing the main burden of these statistics initially – namely tourism, hospitality, retail, beauty, sport and entertainment. These industries have been forced already to lay off significant numbers of staff. What we can all try to do as a community is support any of these industries in any way we can. For instance, buying take-out from local restaurants in some way helps these businesses maintain some cash flow. Sadly, some industries have been mothballed, with very little short-term assistance available from the community. For instance, none of us can travel at present. But what can we do in the future?

As economies rebound, and they do, I encourage people to support these industries that have suffered most where and when they can. This will assist these businesses emerge from their hiatus, and thus assist with some much-needed job creation and private sector liquidity. I expect to see a significant degree of economic growth post this crisis as firms start rehiring to fill a shortage of supply. In the short term we have seen, and will continue to see, governments stepping in to try to fill the lack of liquidity within the system. In the longer term though we will inevitably see governments try to scale back this support when they feel comfortable to do so. Governments will be careful not to crowd out the private sector. As advisors, it is imperative that we remain in dialogue with our clients to ensure the consistency of messaging on these points is maintained.

The pace of recovery within Australia and New Zealand will likely be impacted by our relatively high levels of household debt. Governments and the banking sector are working closely on this front as they know this could stifle the pace of economic recovery. Debt holidays and reduced payment plans are important tools for those impacted to discuss with their financial advisor and banker to ensure that they are best positioned, from both a business and personal perspective, to ride out the current crisis and then be sufficiently cognizant of their position to then look to re-strengthen their position after our lives return to normalcy.

In the meantime, though, many of us are experiencing life in a ‘quasi lockdown’. Those of us who can are operating out of our homes. It remains vital that we try to keep our lives and our economy ticking along as best we can. From a normalcy of life perspective, stay as safe as you can. Keep fit, get sun if you can, and abide by the governments social distancing rules. If you are experiencing any mental health concerns, seek help from experienced counsellors or at least, talk to a friend or family member. From an economic perspective, do all that you can to keep your business operating during these challenging times. Talk to your accountant and financial advisor. Ensure you understand your financial position and that you fully comprehend all the various government assistance packages that may be available to your and/or your business. Hibernation is defined as a ‘period’ of inactivity, and that period will eventually end. We need to all be ready to depart hibernation in as strong a state as possible and reinvigorate our lives and our economies. That is the best way we can recover from the challenges that ‘kicked off’ 2020 and ensure we end the year in the best possible manner.

On behalf of everyone at Bentleys, I would like to thank all the medical practitioners, researchers, cleaners, teachers, and other front line staff who are still making their way to work to make us safe and maintain the quality of life within our communities. You are amazing.

Stay safe one and all, look after yourselves, your family and friends, and your community.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.

COVID-19: A summary of Australia's tax measures

The governments of Australian states and territories have also released independent stimulus packages. For an overview of all Australian measures, click here.

What would you like to learn more about? How can we help you?

Read our latest insights into COVID-19

Find out about Bentleys' response to COVID-19