THERE IS A LEVEL OF PANIC IN THE INDUSTRY about the impact of Omricon on the economy with some fearful that the impact will be long-lasting and similar to the impact of the Delta variant. While this has been heavily promoted by the media a new comprehensive report presented by the Queensland Investment Corporation (QIC) warn that this has been overstated.
At this time businesses need accurate information on which to plan their future. APAN is concerned with the level of panic, and we believe this report with shed some light with hope for the future.
QIC was established in 1991 by the Queensland government to provide credible investment advice for both government and private business plans for sustainable growth and provides its services both nationally and internationally.
Their latest report (based on their research) stated that the impact from Omicron would be a “big hit to consumption” but claims of a 30 per cent drop in consumer demand were overstated.
Other economists have also claimed that the economy had reached a point where the Reserve Bank would have to soon make some key decisions, like stopping its quantitative easing measures which have the effect of pumping cash into the economy, and potentially lifting interest rates twice this year.
But the ANZ said at a national level there has not yet been any sign of recovery from the Omicron malaise in spending, with a decline of 27 per cent in the first half of January compared to the first half of December. Previous years showed a 17-21 per cent decline.
“Weakening consumer confidence through the first half of January is another sign that spending could stay low for a while longer,” ANZ said.
However, QIC is an investor in shopping centres and analysed its own data as well as that publicly available from the banks. It found there had been a significant drop in foot traffic of 33 per cent in NSW and 22 per cent across the Australian portfolio over the first two weeks in January. However, it said this was also due to the normal post-Christmas slow-down.
“Based on this data, we estimate consumer activity is around 6 per cent to 7 per cent weaker than it otherwise would have been due to the outbreak in Omicron,” QIC said.
“While there is evidence of a drop in spending relative to historical norms for the first half of January, media reports based on ANZ and other commercial banks’ credit and debit card data grossly overstates the Omicron impact and paint an unnecessarily grim picture of the outlook for retail sales,” QIC said in its latest analysis report.
“Based on the data to date, we estimate that consumer spending could average around 6 per cent lower than usual levels until around mid-February, rather than the 30 per cent reported in the press.
“By mid-February, the Omicron wave should be past its peak, with consumer spending rebounding quickly, as it has done following the Sydney and Melbourne lockdowns of this past winter and following the Victorian lockdown of 2020.
“As a result, we estimate the impact of the Omicron outbreak to be around a 3 per cent hit to household consumption in the March 2022 quarter.
“While this is a large hit to consumption, it is less severe than during the Delta outbreak and would be unlikely to be enough to send GDP growth into negative in the quarter.”
Other economic data shows the economy has significant momentum. Unemployment is below 5 per cent and the Commonwealth Bank estimated that household savings were about $260 billion.
HOPE FOR THE FUTURE
It is very important that businesses stay vigilant and focus on their economic management as this crisis is predicted to be short-lived. We strongly recommend that those with high rental leases negotiate with their landlords for a temporary decrease in their rent for the next two months. APAN has experienced great success for their members through the services of our solicitors in helping businesses reach a workable agreement with their landlords. If we can assist you in this regard, please contact APAN on 07 5593 0360.
MENTAL HYGIENE PROGRAM
The importance gaining mental and emotional support is critical at this time. APAN MENTAL HYGIENE AND BUSINESS DEVELOPMENT program has been developed to support businesses and their staff to stay strong, resilient, calm and productive as they plan how to navigate through these challenging times.
In the next two weeks, this program will be made available to all members FREE OF CHARGE. It is our way of giving back. To access this program please renew your membership or join for this and numerous other benefits.
Together we are stronger.