ANNUAL ECONOMIC UPDATE WITH CRAIG JAMES, COMMSEC - 18 AUGUST 2020 - SHIREBIZ

Annual Economic Update
   with Craig James,
       CommSec
       18 August 2020

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Australia and COVID-19

                                                      https://pixabay.com/illustrations/coronavirus-virus-spread-flu-4952102/

Craig James, Chief Economist, @CommSec, August 2020

Important Information
    This presentation provides general commentary on global and domestic economic themes and is
    produced by the Commonwealth Securities Limited (CommSec) ABN 60 067 254 399, a wholly owned
    but not guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. The
    presentation has been prepared without taking into account your objectives, financial situation or needs.
    It is not to be construed as a solicitation or an offer to buy or sell any securities or financial instruments,
    or as a recommendation and/or investment advice. Before acting on the information in this presentation,
    you should consider the appropriateness and suitability of the information, having regard to your own
    objectives, financial situation and needs and, if necessary, seek appropriate professional or financial
    advice. Examples used in this presentation are for illustrative purposes only.

    CommSec believes that the information in this presentation is correct and any opinions, conclusions or
    recommendations are reasonably held or made based on information available at the time of its
    compilation, but no representation or warranty is made as to the accuracy, reliability or completeness of
    any statements made. Any opinions, conclusions or recommendations set forth in this presentation are
    subject to change without notice and may differ or be contrary to the opinions, conclusions or
    recommendations expressed by any other member of the Commonwealth Bank of Australia group of
    companies.

4

State of Play: Extraordinary times

     Slower growth in 2019 due to US-China trade & Brexit
     Recovery was underway…then the COVID-19 coronavirus
     Different approaches…but countries go into lockdown
     Rates cut to record low
     Massive government support & stimulus
     Global recession…But ‘V-shaped’?
     Outlook depends on virus containment & vaccine

5

2020      2021
      Global economy
                                                    IMF      -4.9%     +5.4%
 Lockdowns; different approaches; health &         CBA      -3.6%     +5.0%
  economy trade-off; travel bans; oil price slump   ‘Normal’ growth 3.7%

  6

The Australian response
 Act quickly (Announcements
  March 12, 19, 22, 30)
 Lock down the economy,
  support vulnerable
 Aim to keep people employed…
 …and keep business in business
 Targeted, temporary measures
 Monetary & fiscal policy measures
 Direct measures: spending, revenues
 Indirect: Loan guarantees & holidays
 Access to superannuation
7

Federal, State & Territory aid

 $313 billion Federal Government
  measures
 Airlines, aged, health workers,
  tourism, education, housing
 States & Territories
 Infrastructure brought forward
 $340 billion or over 16% of GDP

 8

Australian Lockdown

9

Issues

  Home prices: Modest impact
  Commercial real estate:
   Migration, changed preferences
  Migration: Tourism, Education
  Stimulus: Getting the balance
  Reducing jobless rate
  Second wave: how to react?
  Debt burden

10

Spotlight on NSW

11

Spotlight on NSW

12

Spotlight on Sutherland Shire

13

Spotlight on Small, Medium-sized Enterprises

                                                       ACA Research on SME
                                                        30% report less productivity
                                                         from staff
                                                        71% report lower revenue
                                                        25% use loan deferral
                                                        Only 34% expect revenue to
                                                         return by end 2020
                                                        60% have same or more
                                                         employees
     https://www.acaresearch.com.au/hubfs/ACA%20Research%20COVID-
14   19_Business%20Sentiment_Tracker_WAVE14%20_REPORT_%2010.08.2020.pdf

https://www.acaresearch.com.au/hubfs/ACA%20Research%20COVID-
     19_Business%20Sentiment_Tracker_WAVE14%20_REPORT_%2010.08.2020.pdf
15

COVID-19 messages

    Nick Scali, Adairs, Baby Bunting
    On-line, delivery services
    Flexible workforce
    Conservatism, fear
    Need to be agile
    Future of globalisation
    Future viruses
    Spotlight on Aged care

16

Sharemarket & Currency

                            FOTU
                            Low interest rates
                            Government stimulus
                            Success with COVID
                            Global economy
                            Deferred dividends
                            Shore up balance sheets

17

Monetary policy
 Working with fiscal policy; focus on jobs; cash & 3-year bonds at
  0.25%; bond purchases; negative interest rates?

 18

Australia: Where to from here?

19

Australia: Where to from here?

20

Summary

    Biggest contraction since WW2
    Massive stimulus
    Debt…worry later
    Quick rebound expected
    Jobs is area of concern
    Confidence is the key
    Later in 2020…US-China trade
    US Election

21

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