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The Australia government has announced its plans to release $80 billion to rescue jobs affected by the coronavirus. This brings the total stimulus package to A$320 billion, as the world confirmed coronavirus cases surpasses 700,000.
The Australia government has added $80 billion more stimulus in a plan to rescue jobs affected by the ongoing coronavirus pandemic. The $80 billion will be used to subsidize workers’ wages. As a result, the government will pay wage subsidies of A$1,500 bi-weekly to every employee in order to help struggling businesses keep afloat.
Australia Fights with Coronavirus Pandemic
The news was announced by Prime Minister Scott Morrison during a press conference on Monday. This will now bring the total monetary stimulus to A$320 billion, approximately 16.4% of the gross domestic product. He said:
“Now is the time to dig deep. We are living in unprecedented times. Our goal is to protect the lives and livelihoods of Australians.”
The subsidy which is equivalent to approximately 70% of the median wage will be paid out to all Australian employees for the next six months.
According to Bloomberg, coronavirus has smashed the Australian economy and unemployment could sharply rise from 5.1% to 12% in February, double the figure. This is because hundreds of thousands of workers might potentially lose their jobs.
However, according to the head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney, Su-Lin Ong, the package may not prevent a recession but will go some way in tempering the depth and possibly the duration.
To support the sentiment was Bloomberg’s economist, James McIntyre, who stated that:
“This is the third, but definitely won’t be the final, firing of the fiscal cannon in Australia. The wage subsidy boost will help to save more of the furniture, help more businesses survive and jobs be retained. But it won’t undo all of the damage, which will require further substantial and sustained, fiscal support to help the economy recover.”
Besides the stimulus package, the government also announced that Australian banks will extend loan repayment to six months to over 98% of companies. In addition, the government announced that there will be tighter restrictions on foreign takeovers, whereby all deals will require the government’s approval.
As a result of the positive news, the Australian shares rose by nearly 7%. The S&P/ASX 200 index rose by more than 100 points.
On the Flip-side
Coronavirus has shown its tenacity to take humankind hostage for the next months if not years. The level at which new cases are popping up, keep raising the question if it will be contained soon before more damage is done. This is because, at the time of writing, global confirmed cases had surpassed 700,000, with the number of deaths at 34,018.
With more than 3 billion people on lockdown, and the global demand declining by the day, an economic recession seems imminent. A country like the U.S. has surpassed the 100,000 level overtaking China’s 97,600 level. The UK is looking to a lockdown that could last six months, as the number of cases continues rising by the day.