The recent outbreak of the coronavirus from Wuhan, China, has caused havoc around the world. While the healthcare sector is working non-stop to stop further spread of the disease, the economic condition of all affected countries has taken a huge blow. The Australian currency, AUD, has taken a huge hit from this outbreak and is at its lowest point since 2002. In just a week, AUD lost over 13% of its value when paired with USD. It has been a very rough start for Australia in the year 2020. The year started with the raging bushfires, and now the coronavirus has begun to impact Australia’s economy.

Let us have a look at the factors that have caused this downfall

Factors that have resulted in the downfall of Australia’s economy:

Australia entered the year 2020 on a positive note, and the economy seemed to be on the rise. During the start of the year, 1 AUD was worth 70 U.S. cents. That has since declined to 57 US cents at the time of writing.

Some of the main reasons for such a drastic decline in the economy are:

1- Halted export: Australia has been a prominent exporter of raw minerals such as iron, coal, petroleum, and compressed natural gas. One of the biggest consumers of these raw materials is China. With the outbreak of COVID-19 throughout the world, the exports were heavily impacted. China imports about a third of iron and coal that is exported by Australia. As all factories remain closed due to the coronavirus outbreak, the demand for these two raw materials has declined. Due to the decline in exports, the net revenue that Australia receives has also reduced drastically. That, in turn, has had a severe impact on its economy.

2- Tourism: Australia is widely known for its tourism. Due to the well-preserved nature that one can experience there, the number of tourists that Australia brings in is very high. As reported by the Australian Bureau of Statistics, last year alone, Australia saw about 8.66 million tourists visit the nation. Out of this, 1.33 million tourists were from China. With 27% of the net revenue of A$4.5 Billion spent by just the Chinese tourists, Australia is missing out on this revenue due to the outbreak in China. Since the declaration of the pandemic state by the American president, Donald Trump, the revenue that Australia generates from tourism alone has been reduced to null. Thus, having a significant impact on its economy.

Is there any way to avoid the decrease of AUD currency?

With the coronavirus spread throughout the globe, countries all over are experiencing a decline in their economy. With two of Australia’s major revenue sources cut-off, the economic condition of the nation was likely to take a hit. The only possible way to avoid the further decrease of its value is to prevent the further spread of the coronavirus. The faster we can fight this virus, the faster the will AUD recover.

Pierre  El Sokhn