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The Wuhan coronavirus could cost Australia's economy over $2 billion, as its spread blitzes global markets

Jack Derwin
  • The Australian stockmarket and economy are expected to take a hit from the spread of the Wuhan coronavirus.
  • Analysis by PwC puts the initial cost at $2.3 billion as Chinese tourists and students cancel trips to Australia and restrict spending.
  • Meanwhile the ASX fell 1.45% on opening, after Wall Street and global markets fell overnight.
  • Visit Business Insider Australia’s homepage for more stories.

The next casualty of the Wuhan virus could be the Australian economy.

All in all, it could cost the country $2.3 billion and some 20,000 jobs, according to analysis by PricewaterhouseCoopers, which has estimated the virus will cannonball the $9.2 billion spent annually here by Chinese tourists and students.

It's just more bad news for Australian tourism, already expected to be gutted by the country's catastrophic bushfires. Its retail sector meanwhile looks set to suffer more falling sales, which won't be helped by the outbreak.

READ MORE: The bushfires are set to cost Australia billions of dollars, as the government's long-touted budget surplus looks to go up in smoke

Beyond the initial impact, the virus could place increasing pressure on Australia's weak economy, vulnerable to the outbreak given China's status as its number one trading partner, and recipient of nearly a third of our exports. Societe General analysts estimate the virus could push Chinese GDP growth below its 6% target, then flowing on to the global economy at large.

READ MORE: The Wuhan coronavirus could blow up the game China's been playing with its economy for years

The Australian Securities Exchange (ASX) meanwhile, closed for a long weekend due to the Australia Day public holiday, immediately fell more than 100 points, or around 1.45%, after the opening bell on Tuesday.

On Monday, Wall Street sold down as the S&P 500 and the Dow Jones both fell 1.57%, while the Nasdaq – made up of many tech companies with exposure to Asia – dropped 1.89% as the Wuhan virus continued to spread to 12 countries outside of China, including Australia. The Shanghai Composite meanwhile dropped more nearly 3%, Japan's Nikkei 225 lost more than 2% while Korea's KOSPI moved almost 1% lower.

READ MORE: A 50-year-old man in Victoria has been confirmed as the first Australian case of coronavirus

Gold, a safe-haven asset, is trading at the highest levels since early 2013, while the Australian dollar was wiped 1.2% against the Japanese Yen.

Globally, companies are coming to terms with it. Starbucks' stock price took a shellacking as it was forced to shutter stores in China's Hubei province for the duration of Chinese New Year. It wasn't alone. Disney has also had to close its Shanghai and Hong Kong theme parks as a result.

How long this economic volatility will last remains unclear. RBC Capital Markets' Tom Porcelli said he was "unconvinced by what is now a heightened level of hyperbole with regards to this risk" in a research note issued on Monday.

At the time of writing, the virus had killed 80 people and infected 2,700, with those figures expected to rise.