Prior to this latest COVID-19 outbreak, Australia was on-track to live up to its namesake of ‘the lucky country’.
In a recent Economics Insights report, Commonwealth Bank’s Head of Australian Economics, Gareth Aird, said the country’s economic outcomes were strong, COVID-19 was by and large not circulating in the community, and the vaccine rollout was moving forward – albeit slowly.
“We appeared very much on course to end the year with an unemployment rate of approximately 4.5 per cent and the vast majority of the adult population vaccinated. Australian exceptionalism would once again shine and the world would look upon us with envious eyes and wonder how exactly we pulled it off,” Mr Aird wrote.
Unfortunately, that idyllic scenario didn’t materialise. A new outbreak of the virus sent many of the states into lockdown and forced many economists to send their forecasts to the shredder.
“A deep contraction in GDP over Q3 21 is now a fait accompli. It is the inevitable consequence of shutting down large parts of the economy. Employment will fall and unemployment will rise. But outcomes across the country will vary greatly,” Mr Aird wrote in his recent Economics Insight report.
“The Australian economy will become two-speed. The NSW economy will contract heavily over Q3 21 as restrictions to limit the spread of the virus reduce the production of goods and services. In contrast, the rest of Australia is likely to expand modestly, subject of course to any further COVID-related distributions.”
Mr Aird said despite the setback, the economic outlook in the medium term looks very good “provided the successful rollout of the vaccine means that COVID-19 restrictions are no longer imposed on the domestic economy.”
He added: “the RBA will continue to run exceptionally loose monetary policy while the 2021 Budget indicates fiscal settings will remain expansionary. In addition, the international border will reopen which will boost demand in the economy. Finally and importantly, next year households and businesses will be operating in an environment of less COVID-related uncertainty which will propel ‘animal spirits’ higher.”
Over the last 18 months, government and businesses have sought to deliver extensive support measures to assist those Australians who have been significantly impacted by the health pandemic.
Since the start of the pandemic, Commonwealth Bank has introduced a raft of customer support measures including home and business loan deferrals, fee waivers, SME recovery loans and tailored support and assistance packages for customers experiencing ongoing hardship.
In addition, the bank has grown its financial assistance teams by more than 1,000 people, and introduced new digital features in a bid to help customers better manage their finances during this time.
Commonwealth Bank also created a COVID-19 support page and sent personalised reminders to help keep customers informed about the latest support measures that are available to them. More than 730 million in-app messages have been sent relating to COVID-19 support and information, while the Commonwealth Bank COVID support website has received in excess of 6 million page views.
More recently and following a further COVID-19 outbreak in June this year, the bank introduced additional support measures to help impacted business and home loan customers.
Eligible small business customers with a better business loan of up to $3 million were offered a repayment holiday of up to three months, to provide cash flow relief if their business had been significantly impacted.
Meanwhile, home loan customers significantly impacted by the latest COVID-19 related lockdown restrictions were given access to a two-month deferral on their mortgage repayments.
Further, the bank extended its current moratorium on any foreclosures until February 2022. This extension will allow owner-occupier customers who have made their home loan repayments on time for at least 12 months prior to their deferral, but are again unable to make their full repayments, to remain in their home until the New Year.
When announcing the additional customer support measures earlier this year, Commonwealth Bank’s Chief Executive Officer Matt Comyn said: “This is a critical time for all of us to pull together and support the communities most heavily impacted by the latest COVID-19 outbreak and the resulting lockdowns.
“Our communities have shown how resilient they can be but we know that it is important to assure them that the country’s banks including CBA stand ready to help them with a series of financial support measures including lending and individually tailored assistance.
“As the past year and half has shown, Australia has a strong, stable and very secure financial system. This includes well-capitalised and strong banks like CBA, which together with the support of the federal and state governments, regulators and the broader industry, have helped the country get through the worst pandemic in 100 years. The country’s track record since March last year shows we can weather this latest storm and we as industry can help do that by providing the necessary support where it is needed,” he said.
Looking ahead, and despite the threat posed by the current ‘delta variant’, Mr Comyn said he was confident that the measures being taken will bring the health situation under control and Australians will be able to resume their normal lives again in the not too distant future.
