Having a financial plan in action is one of the most important things you can do in…
2020 has been a year unlike any of which most of us have lived through. The events of COVOD-19 have appeared to grind the globe to a standstill, as we all stopped and entered some form of lockdown, witnessing a piece of history unfold. Now that restrictions are lifting, its hard to imagine that life will ever be the same again, and perhaps in many ways that may be true. Lets look at what some of the ongoing financial and economic impact of the pandemic could be – things to think about if making investments or plans for the future.
The extraordinary event of COVID-19 has seen drastic changes made to the workforce, with hundreds of thousands of Australians left to face long term unemployment. A good deal of Australians that held on to their jobs were expected by government and even employers to pick up their things and work from home, as lockdown settled upon us. Now that restrictions are lifting, people are now considering what work life will look like after lockdown. The conversation discusses that new practical expectations may emerge, framing the possible limitations of remote working and communicating.
While not everyone has the privilege or perhaps even the desire to work remotely, video conferences and meetings may keep their place post pandemic and could result in less domestic business travel for meetings. A lot of businesses have discovered the flexibility and functionality that communication technology brings to our working lives. This new way of thinking about work could be the catalyst for companies to embrace remote work forces. It may even lead to people spilling out of densely populated capital cities for a tree-change but keep their city-based jobs.
Globalisation? We May Become More Self-Sufficient
There are so many differing opinions when it comes to globalisation that it can be hard to know whether it can be a good or a bad thing. Truth be told, globalisation is complicated, so it is best to see both sides of the story.
Forbes highlights the argument that globalisation gives an opportunity to solve real world issues like poverty and unemployment. It could also potentially grow the economy with free trade, reducing unemployment rates and lowering costs of products.
Some say however, that globalisation is supposed to represent free trade, yet there are still many barriers in the way with 161 countries who still have value added taxes on imports.
Since coronavirus these has been a push for Australia to be self-sufficient when it comes to importing and exporting. The federal government seems to be focusing in on potentially growing Australia’s agriculture industry. The Sydney Morning Herald noted that some believe it could serve the purpose of creating more jobs, provided that the government does something about the current procedures. An economic stimulus package or certain restrictions on trade, could be key in making Australia more self-sufficient.
There is also the view that Australia should take note of recent events and focus on providing key essentials required during times of crisis, war and pandemics, rather than relying heavily on importing these goods.
Changing Relationship with China
As mentioned above, some have noted there is a need for reduced reliance on China’s export. Most recently China has reacted to the international COVID-19 enquiry by threatening to sever Australia’s $63 billion iron ore export pipeline to Beijing and telling Chinese coal companies to no longer buy Australian coal. news.com.au comments that amongst other threats such as meat import suspensions, this is seen as an act of bullying and the Prime Minister has been urged to stand firm. The Guardian comments that China has reacted against claims from other governments that the outbreak of COVID-19 was not handled well.
Travel has been in the spotlight ever since the COVID crisis hit our shores. Magellan explains that a reduction in demand for travel may be lasting, with industries such as cruises being the hardest hit.
Businesses may also decide that a lot of travel that was previously appropriate, could be just as easily be replaced with solutions such as video conferencing.
Consequences and concerns for cities are vast, as the Guardian indicates that reducing public transport is detrimental to cities and puts a lot of pressure on roads, as many opt to use their cars. Cheap petrol prices may be here to stay, long after demand begins to increase, making petrol cars cheap and electric cars perhaps seem less appealing, at least for now.
The Way Forward
The ABC says that most economists agree the Government shouldn’t be rushing into repairing our budget, with priority being placed instead of tax reform, as key to recovering from this worldwide crisis. Economic recovery will not be overnight, and unemployment could possibly be a longstanding issue that the Government may have to pour even more focus and funds on to repair.
Some say a growth in economy will be important for shrinking the nation’s debt and an industrial relations reform will be called for.
Before making investment decisions, particularly in these unprecedented times, seek financial advice from a financial planner to work out an investment strategy to suit your individual goals.
To speak to a financial adviser, call 02 4038 1623.
The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.
The views expressed in this publication are solely those of the author; they are not reflective or indicative of licensee’s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the express written consent of the author. Elliot Watson Financial Planning Pty Ltd is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
6. Post Coronavirus – What Could Be The Longer-term Financial and Economic Impacts