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Australian consumers shellshocked as Omicron hits spending, growth -Breaking

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© Reuters. FILEPHOTO: A line of shoppers forms in front of a Sydney mall, Australia. December 17, 2020. REUTERS/Loren Elliott/File Photo

Wayne Cole

SYDNEY. (Reuters.) Last week, Australian consumer confidence was hit hard by a spike in coronavirus-related cases. Self-imposed lockdowns were implemented to reduce spending and cut off supply chains.

A ANZ survey on Tuesday indicated that the measure of sentiment among consumers fell to 7.6%, its lowest reading since October 2020. It was lower even than in the Delta variant surge during which most of the country had been officially secured.

The government is pledging to ease restrictions, saying that vaccination rates of over 90% can help ensure an open economy.

However, rising numbers of deaths and record-breaking new cases have caused households to limit their movement and spend on services. Many thousands have been forced from essential jobs by the increasing need for isolation.

David Plank from ANZ, the head of Australian economics, stated, “We don’t believe that the economy, as the data might suggest,” adding, “We don’t think it is as weak, with the shock caused by the Omicron surge, and strains upon testing capability, the key drivers for the fall instead of underlying economic conditions.”

The result shows that COVID concerns can have a significant impact on the economy, if they persist.

This survey revealed a dire picture with economic indicators down 7.6% and measures about respondents’ current financial situation falling by 11.3%. The index of when it is a good time for major household items fell to 11.4%, its lowest level since August 2020.

Gareth Aird of the CBA’s Australian economics team estimated the spread could reduce gross domestic product growth by more than 1%. He also reduced his forecast for March quarter from 2.3% to 1.0%.

Aird stated, “The economy will be tested and difficult over the next couple of months.”

The rapid spread COVID may make us immune by mid-year. Economic activity and hours work should rebound in the third quarter.

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